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As filed with the Securities and Exchange Commission on July 21, 2021

Registration No. 333-257715

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1 to

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Teads B.V.(*)

(Exact name of Registrant as specified in its charter)

 

 

 

(*)

Teads B.V. is a newly formed holding company for the business of Teads S.A., an existing private holding company. We intend to convert the legal form of our Company under Dutch law from a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) to a public company (naamloze vennootschap) and to change the name from Teads B.V. to Teads N.V. prior to the closing of this offering.

 

 

Not Applicable

(Translation of Registrant’s name into English)

 

 

 

Netherlands   7310   N/A

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

Danzigerkade 15B

1013 AP Amsterdam, the Netherlands

+31 (0)6 2157 3727

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

Armando Mariano Gil

Teads INC.

55 5th Avenue, 17th Floor

New York, New York 10003

(408)-712-3198

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

Pierre Chappaz

Bertrand Quesada

Caroline Barbery

Teads B.V.

Danzigerkade 15B

1013 AP Amsterdam, the Netherlands

+31 (0)6 2157 3727

 

 

Richard Alsop

Kristina Trauger

Shearman & Sterling LLP

599 Lexington Avenue

New York, NY

10022-6069

(212) 848-4000

 

Craig Marcus

Michael Kazakevich

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

(617) 951-7000

 

Gaby Smeenk

Martin van Olffen

De Brauw Blackstone Westbroek

Claude Debussylaan 80

1082 MD Amsterdam

+31 20 577 1771

 

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act of 1933.

Emerging Growth Company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

  Amount to be
registered(1)
 

Proposed maximum
offering price per
share(2)

 

Proposed maximum

aggregate

offering price(1)(2)

  Amount of
registration fee(3)

Class A common shares, €0.01 par value per share

 

44,275,000

  $21.00   $929,775,000.00   $101,438.45

 

 

(1)

Includes the Class A common shares that the underwriters have the option to purchase to cover over-allotments.

(2)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) of the Securities Act of 1933, as amended.

(3)

The registrant previously paid $10,910 in connection with the initial filing of the registration statement.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said section 8(a), may determine.

 

 

 


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The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling shareholders are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

 

PROSPECTUS (SUBJECT TO COMPLETION)—DATED JULY 21, 2021

38,500,000 Shares

 

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Class A common shares

Teads B.V.

to be converted to and renamed as

Teads N.V.

 

 

This is an initial public offering of Class A common shares, par value €0.01 per share (“Class A Shares”), of Teads B.V., which will be converted into a public company (naamloze vennootschap) and renamed Teads N.V. prior to the closing of this initial public offering. The selling shareholders are offering 38,500,000 Class A Shares. We expect the initial public offering price will be between $18.00 and $21.00 per Class A Share. Currently, no public market exists for our Class A Shares. We will not receive any of the proceeds from the Class A Shares sold by the selling shareholders.

The selling shareholders have granted the underwriters an option for a period of 30 days after the date of this prospectus to purchase up to an additional 5,775,000 Class A Shares from the selling shareholders at the initial public offering price less the underwriting discounts and commissions.

Upon closing of this offering, we will have two classes of common shares: Class A Shares and Class B common shares (“Class B Shares” and, together with the Class A Shares, the “Common Shares”). The rights of holders of Class A Shares and Class B Shares will be identical except with respect to voting, pre-emptive and conversion rights. Each Class A Share will be entitled to one vote. Each Class B Share will be entitled to 25 votes and will be convertible at any time upon request into 25 Class A Shares of which the converting shareholder will effectively receive one Class A Share. The holder of our outstanding Class B Shares, Altice International S.à r.l., will hold approximately 98.5% of the voting rights of our outstanding share capital immediately following this offering. Patrick Drahi is the indirect controlling shareholder of Altice International S.à r.l.

After the closing of this offering, we will be a “controlled company” within the meaning of the corporate governance standards of the NASDAQ Global Select Market (“Nasdaq”). See “Risk Factors” and “Management—Corporate Governance—Controlled Company” for additional information. We have applied to list the Class A Shares on Nasdaq under the symbol “TEAD.”

 

 

We are an “emerging growth company” under the U.S. federal securities laws, and as such, we have elected to comply with reduced reporting requirements for this prospectus and may elect to do so in future filings.

Investing in our Class A Shares involves risks. See “Risk Factors” beginning on page 18 to read about certain factors you should consider before buying our Class A Shares.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

     Per
Class A
Share
     Total  

Initial public offering price

   $                    $                

Underwriting discounts and commissions(1)

   $                    $                

Proceeds, before expenses, to the selling shareholders

   $                    $                

 

(1)

See “Underwriting” for a description of the compensation payable to the underwriters.

The underwriters expect to deliver the Class A Shares against payment on or about                      , 2021.

 

 

 

Goldman Sachs   Morgan Stanley     J.P. Morgan  
BNP  PARIBAS   Citigroup
JMP Securities        Raymond James   William Blair

 

 

Prospectus dated                      , 2021


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We Deliver Exceptional Value to Publishers, Advertisers and Agencies Adidas has renewed its global joint business partnership with Teads for 2021, the fourth consecutive year. Simon Peel Senior Director Global Media Adidas Danone chose Teads as a key partner shifting investment in multiple markets globally, leveraging not only the quality inventory, but creative studio optimizations, and custom audience targeting. Catherine Lautier Global Head of Media Danone VICE is excited to be working alongside Teads, who we have found to deliver reliable and consistent high-quality brand video content through ad formats that perform yet respect our users experience. Alex Payne VP Global Programmatic Solutions Vice Media As we enter our 5th year of partnership, we see the relationship with Teads as an important part of our business mix. Errol Barran Global SVP BBC Global News The Global Media Platform


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TABLE OF CONTENTS

 

     Page  

PROSPECTUS SUMMARY

     1  

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

     14  

RISK FACTORS

     18  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     54  

USE OF PROCEEDS

     55  

DIVIDEND POLICY

     56  

CAPITALIZATION

     57  

DILUTION

     58  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     59  

FOUNDERS’ LETTER

     74  

BUSINESS

     76  

MANAGEMENT

     99  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     113  

PRINCIPAL AND SELLING SHAREHOLDERS

     115  

DESCRIPTION OF SHARE CAPITAL

     118  

COMPARISON OF NETHERLANDS CORPORATE LAW AND DELAWARE CORPORATE LAW

     132  

SHARES ELIGIBLE FOR FUTURE SALE

     143  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     146  

CERTAIN DUTCH TAX CONSIDERATIONS

     151  

UNDERWRITING

     156  

EXPENSES OF THIS OFFERING

     164  

LEGAL MATTERS

     165  

EXPERTS

     165  

CHANGE IN THE REGISTRANT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANT

     165  

ENFORCEMENT OF CIVIL LIABILITIES

     167  

WHERE YOU CAN FIND MORE INFORMATION

     168  

INDEX TO FINANCIAL STATEMENTS

     F-1  

You should rely only on the information contained in this prospectus, any amendment or supplement to this prospectus and any free writing prospectus prepared by us or on our behalf that we have referred you to. We have not, and the underwriters have not, authorized anyone to provide you with different or additional information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have authorized for use with respect to this offering. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you or any representation that others may make to you. We are not making an offer of these securities in any state, country or other jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any free writing prospectus is accurate as of any date other than the date of the applicable document regardless of its time of delivery or the time of any sales of our Class A Shares. Our business, financial condition, results of operations or cash flows may have changed since the date of the applicable document.

 

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Unless otherwise indicated or where the context otherwise requires, all references in this prospectus to the “Company”, “Teads B.V.”, “Teads”, “we”, “us”, “our” or similar terms refer to (i) Teads S.A. and its subsidiaries, before its business is transferred to Teads B.V.; (ii) Teads B.V. and its subsidiaries after such transfer; and (iii) Teads N.V. and its subsidiaries, after giving effect to the conversion of Teads B.V. into Teads N.V. See “Prospectus Summary—Corporate Reorganization.” References to “Altice International” refer to Altice International S.à r.l.

Industry and Market Data

This prospectus includes market data and forecasts with respect to current and projected market sizes for the digital advertising industry. Although we are responsible for all of the disclosure contained in this prospectus, in some cases we rely on and refer to market data and certain industry forecasts that were obtained from third-party surveys, market research, consultant surveys, publicly available information and industry publications and surveys that we believe to be reliable. Unless otherwise indicated, all market and industry data and other statistical information and forecasts contained in this prospectus are based on independent industry publications, reports by market research firms or other published independent sources and other externally obtained data that we believe to be reliable.

Some market and industry data, and statistical information and forecasts, are also based on management’s estimates. Any such market data, information or forecast may prove to be inaccurate because of the method by which we obtain it or because it cannot always be verified with complete certainty given the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties, including those discussed under the captions “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Presentation of Financial Information

We present our financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).

The financial statements of the Company that are included in this prospectus consist of (i) the statement of financial position as of May 14, 2021 of Altice Temp B.V. (a newly formed company which was renamed Teads B.V. on July 2, 2021); (ii) the consolidated statements of operations for the years ended December 31, 2020 and 2019, the consolidated statements of comprehensive income for the years ended December 31, 2020 and 2019, the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of changes in equity as of December 31, 2020 and 2019 and the consolidated statements of cash flows for the years ended December 31, 2020 and 2019 of Teads S.A.; and (iii) the unaudited condensed interim consolidated statements of operations for the three months ended March 31, 2021 and 2020, the unaudited condensed interim consolidated statements of comprehensive income for the three months ended March 31, 2021 and 2020, the unaudited condensed interim consolidated balance sheet as of March 31, 2021, the unaudited condensed interim consolidated statements of changes in equity as at March 31, 2021 and 2020 and the unaudited condensed interim consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 of Teads S.A. See “Prospectus Summary—Corporate Reorganization.”

We publish our consolidated financial statements in U.S. dollars. In this prospectus, unless otherwise specified, all monetary amounts are in U.S. dollars, all references to “US$”, “$”, “USD” and “dollars” mean U.S. dollars.

 

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in our Class A Shares, you should read this entire prospectus carefully, including the sections of this prospectus entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes contained elsewhere in this prospectus.

Our Mission

Our mission is to provide peace of mind and exceptional results to advertisers, an engaging and respectful experience to consumers and premium monetization for media owners.

Overview

We operate a leading, cloud-based, end-to-end technology platform that enables programmatic digital advertising for a global, curated ecosystem of quality advertisers and their agencies and quality publishers. We operate in the internet ecosystem (the “Open Web”) outside of advertising platforms, like Facebook and Google, which are known as the walled gardens (the “Walled Gardens”). As an end-to-end solution, our platform consists of buy-side, sell-side, creative, data and AI optimization modules. As a result, we have built deep partnerships with both the demand and supply sides of digital advertising. For advertisers and their agencies, our platform offers a single access point to buy the inventory of many of the world’s best publishers. Through exclusive partnerships with these premium publishers, we enable customers to reach 1.9 billion unique monthly users (as of April 2021), while improving the efficiency, quality and cost of digital ad transactions. For about 3,100 publishers, we are a trusted monetization partner, providing the technology required to monetize their most valuable ad inventory programmatically. By connecting both sides through our integrated platform, known as the Teads Global Media Platform, we solve the digital programmatic advertising industry’s most significant problems related to value chain fragmentation, inefficient digital advertising pricing and quality and scale of inventory. We refer to the ecosystem enabled by Teads Global Media Platform as the curated internet (the “Curated Internet”).

Our innovative and comprehensive set of products have been trusted by publishers on the Open Web for almost a decade. In 2012, we pioneered an industry-defining video advertising format known as outstream, which is embedded in-article, specifically in between two paragraphs of editorial text. This invention immediately solved one of the biggest problems in digital advertising related to the lack of quality video inventory. Our platform is also capable of delivering display ads, which are the preferred advertising format for performance-oriented campaigns, as well as other web and app formats.

Through our Curated Internet, we offer advertisers and their agencies access to high-quality inventory at scale, solving a major problem for our customers. Advertisers and their agencies can work directly with us through our self-serve buying interface, Teads Ad Manager, or through third-party demand side platforms (“DSPs”). Regardless of how or where advertisers transact, they have access to our quality inventory sources on behalf of our publisher partners. Teads Ad Manager has the advantage of leveraging our machine learning prediction models, which are focused specifically on our publisher partners and our in-article placements. We use our predictive machine learning algorithms to process large volumes of data based on thousands of campaigns to deliver superior outcomes for customers. As a result, we believe we can offer significant cost efficiencies and greater return on investment (“ROI”) to agencies and advertisers who access our publisher partners’ inventory directly through Teads Ad Manager. On average in 2020, Teads Ad Manager delivered 24% lower cost per thousand impressions (“CPMs”), higher results on customers’ key performance indicators (“KPIs”) (including more than doubling the click-through rate and higher completion rate and viewability), and 100% more scale compared to DSPs.

We enable publishers to monetize their digital advertising inventory through our Teads for Publishers platform, which provides them with direct sale capabilities and is directly connected to our buy-side interface,

 

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Teads Ad Manager. This full monetization platform is comprised of our proprietary supply side platform, based on open source technologies (“SSP”), ad exchange, ad server, video player, ad quality management, a comprehensive self-serve interface, full set of ad formats and audience and other targeting capabilities. As a result, we are deeply embedded with our publisher partners, who rely upon our technology platform to monetize their most valuable sources of ad inventory. We believe this drives publisher stickiness and retention. For the year ended December 31, 2020, the number of our top 500 publishers retained from the prior period end (our “Publisher Retention Rate”) was approximately 99%. We operate exclusive partnerships with over 80% of our publishers for their in-article video inventory, demonstrating the value we deliver. Our longstanding publisher partnerships are aggregated into a highly curated version of the Open Web that includes many of the world’s leading publishers like The BBC, ESPN, Meredith, The Guardian, Bloomberg, The Washington Post, Vogue, L’Equipe, El Mundo, Der Spiegel, South China Morning Post and El Universal. Our Curated Internet reaches 1.9 billion unique monthly users worldwide (as of April 2021) and presents a significant value proposition to advertisers and agencies. As of March 31, 2021, we had about 3,100 editorial publishers on our platform, representing more than 15,000 web and app properties that provide access to more than one trillion ad opportunities every year.

We operate an efficient go-to-market strategy. Our primary customer, in most cases, is the advertising agency, which can represent up to hundreds of advertisers, providing us an efficient point of contact to serve many advertisers. For larger advertisers, we have a dedicated team that advises on utilizing our services for various advertising needs, including leveraging our creative, data and research solutions. In these instances, we work very collaboratively with such advertisers’ agencies. We also deploy a team exclusively focused on partnerships with DSPs. We work with leading global advertisers across various verticals such as technology, automotive, CPG, finance and entertainment. Our number of customers, defined as customers who spent at least $1,000 in the trailing 12-month period, grew to approximately 2,000 as of December 31, 2020. 91% and 94% of our total revenue in the years ended December 31, 2019 and December 31, 2020 came from customers that contributed more than $1,000 in trailing 12-month revenue. The retention rate of customers who spent above $150,000 with us in the prior period compared to those same customers in the current period irrespective of their spending (the “Gross Customer Retention Rate”) was 94% for each of the years ended December 31, 2019 and December 31, 2020.

We have a powerful combination of scale, growth and profitability. Our revenue grew from $509.5 million for the year ended December 31, 2019 to $540.3 million for the year ended December 31, 2020, representing a year-over-year growth rate of 6%, despite a negative impact of the COVID-19 pandemic in the first half of 2020, and from $95.6 million for the three months ended March 31, 2020 to $126.6 million for the three months ended March 31, 2021, representing a period-over-period growth rate of 32%. Our profit for the year ended December 31, 2020 and the three months ended March 31, 2021 was $111.5 million, representing a net profit margin of 20.6%, and $28.0 million, representing a net profit margin of 22.1%, respectively. We generated Adjusted EBITDA* of $173.8 million for the year ended December 31, 2020, representing an Adjusted EBITDA margin of 32.2%, and $38.7 million for the three months ended March 31, 2021, representing an Adjusted EBITDA margin of 31%. For more information on the nature of the impact of the COVID-19 pandemic on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance—The COVID-19 Pandemic”.

Our Market Opportunity

Per the International Data Corporation (“IDC”), the global advertising market was estimated to be $682 billion in 2020 and is expected to grow at a compounded annual growth rate (“CAGR”) of 3.3% from 2020 through 2024. As consumers have spent increasingly more time online with the rise of mobile devices, social media platforms and the proliferation of online content, the global digital advertising market has experienced rapid growth. Digital advertising growth is expected to outpace the overall advertising market as digital continues

 

* 

Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see “Summary Historical Consolidated Financial and Other Data.”

 

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to take market share from traditional media like print and radio. Of the global advertising market, $319 billion, or 47% was attributed to global digital advertising spend. Digital advertising has increased from 36% of total advertising in 2017 and is expected to grow to 55% of total advertising by 2024. Per IDC, in the U.S., digital advertising was estimated to be $128 billion in 2020 and is expected to grow at a 7.4% CAGR from 2020 through 2024.

We believe our business is positioned to capture this growth opportunity as more ad dollars are allocated to digital. Specifically, we compete for global digital advertising budgets allocated to display and video advertising formats. We define our addressable market as global digital advertising spending, which was estimated at $319 billion in 2020 and is expected to grow at a 7.5% CAGR from 2020 through 2024. We compete with larger advertising platforms like Facebook and Google’s YouTube as well as various competitors who serve the Open Web. Our platform connects advertisers to a highly curated segment of the Open Web that is composed of high-quality publishers and scale inventory. By addressing key issues related to the quality of inventory and ROI, we believe we are helping drive relevance and advertising spend to the Open Web. Although advertising on the Walled Gardens represents a significant amount of global digital ad spend, advertisers are increasingly raising concerns about the lack of transparency and accountability of user-generated content found on these platforms. eMarketer expects that more marketers will restrict advertising spending on Walled Gardens and social media platforms due to brand safety and ethical concerns. According to a survey from eMarketer, the lack of transparency from Walled Gardens is likely to result in decreased advertiser spending in those channels going forward. In a survey of U.S. digital media experts conducted by Integral Ad Science in October 2020, 63% of survey participants expect that insufficient transparency will affect Facebook. Advertisers also cite frustrations about their limited ability to access and use their data outside of Walled Gardens. In contrast, the Open Web allows for access to high-quality, editorial content in an environment where consumers are curious and engaged. As advertisers recognize these differences and as we curate an improved Open Web experience, we believe demand for our solutions will continue to grow.

Within the global digital advertising market, there are several segments that are driving above-market growth for our business:

Shift to Programmatic. Programmatic advertising is the automated buying and selling of digital ads, optimizing performance and pricing through real-time signals. Programmatic advertising has drastically improved the efficiency of buying and selling ads and driven increased adoption of digital advertising. According to IDC, global programmatic digital ad spending was $142 billion in 2020 and is expected to grow at a 10% CAGR from 2020 through 2024. This does not include search advertising. Within programmatic advertising, programmatic digital video advertising spending was estimated at $53 billion in 2020 and is expected to grow at a 12.6% CAGR from 2020 through 2024. Digital advertisers have embraced programmatic advertising, which improves the optimization of both performance and pricing through real-time indicators. Currently, display and video programmatic advertising represents 45% of the total digital advertising market and is expected to increase to 49% by 2024. 100% of our business is programmatic.

Mobile Is the Dominant Format in Digital Advertising. For consumers, mobile is now the primary and preferred device format for consuming digital content and making purchases. According to Statista, there are currently 14 billion mobile devices in use globally, and this is expected to expand at a 6.0% CAGR from 2020 through 2024 to an estimated 17.7 billion devices. As global mobile device growth explodes, facilitated by improved devices and connectivity, growth in mobile advertising is expected to continue. The digital mobile advertising market has grown at a 26% CAGR since 2017 to $197 billion in 2020 according to IDC and is expected to grow at a 12.7% CAGR going forward from 2020 through 2024. Mobile currently contributes 62% of digital advertising but is expected to represent 75% in 2024. Display advertising dollars continue to shift from desktop to mobile with more than 70% of digital display ad dollars flowing to mobile ads according to eMarketer. Approximately 80% of our business is mobile. Mobile also dominates spending within the subcategory of video with its share hovering just under two-thirds of the total according to eMarketer. We believe we are well-positioned to gain from the continual growth of the mobile advertising opportunity because most of our advertising inventory is on mobile devices and in-article placement is especially prominent on mobile devices, taking up a bigger proportion of the screen than the same ad on desktop screens.

 

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Popularity and Increasing Usage of Video Ad Formats. Advertisers continue to see greater value in, and ROI from, video advertising, and are shifting their budget allocation from traditional formats to video formats. According to IDC, in 2020 video advertising was $57 billion of the overall digital advertising market, or 18%. This is expected to increase to 20% of the total digital market by 2024 and grow at an 11% CAGR, which outpaces the market. The popularity of video advertising has only been increased by the COVID-19 pandemic as video helps consumers connect and understand products better virtually. We believe our outstream video ad format has provided the industry with quality video advertising at scale that was previously lacking. Connected TV (“CTV”), although relatively nascent, is a growing piece of the digital video ad market as consumers increasingly shift from linear to streaming video content; the market was estimated to be approximately $8 billion in 2020, per IDC. Approximately 60% of our business is video.

Performance Advertising Growth. Performance advertising, as opposed to brand advertising, is used to achieve measurable results, including retaining an audience, generating leads, boosting sales or increasing loyalty, as a direct and immediate result of users seeing and interacting with an ad. Performance advertising can increase the immediate effectiveness of a marketing budget, maximize ROI and allow for more precise measurement of results. In response to tightening budgets during the COVID-19 pandemic, many advertisers shifted their budget allocation to performance advertising, which offered more direct and immediate results. According to IDC, the global performance advertising market was estimated to be $176 billion in 2020 and is expected to grow at an 8.1% CAGR from 2020 through 2024. Today, companies rely on a healthy mix of performance and brand advertising and we offer solutions for both.

Who We Are

Teads S.A. was founded approximately 15 years ago by Pierre Chappaz and Bertrand Quesada. Since then, we have grown to approximately 820 employees as of March 31, 2021 with 36 offices across 23 countries.

We are an innovative company that has enjoyed robust growth since inception. We invented the outstream video advertising format and we believe we are the market leader for in-article video advertising, which has driven our sustained growth. Inserting videos in between two paragraphs of editorial text created a new video ad product that quickly grew to represent a scale source of video advertising inventory and a new opportunity to monetize. Our innovation enabled us to quickly secure exclusive partnerships with many of the world’s leading publishers, which in turn allowed us to build advertising solutions that leading brands and their agencies depend upon. Our exclusive and longstanding publisher partnerships allowed us to build what we believe is the largest global network of premium publishers, allowing us to attract leading advertisers globally who deliver scaled, premium demand to our publisher partners around the globe. Our full-stack, end-to-end technology platform is used by both customers and publishers and bridges either end of the market. Our differentiated two-sided network represents a high barrier to entry while providing a dependable stream of recurring revenue.

We believe our differentiated approach has generated value for our customers, leading to numerous awards, including:

 

   

Best Brand Positioning/Awareness Campaigns

IAB Mixx Europe, 2020

 

   

Best Video Ad Tech Innovation

DIGIDAY Global, 2020

 

   

Best Use of Digital

Festival of Media LATAM 2020

 

   

Best Places to Work

Inc’s Magazine 2017

 

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Our Core Values

Our culture is defined by a clear set of ten core values, each of which is critical to our success. We believe that these values not only guide our business and define our brand, but also deliver real financial and operational benefits for us, our customers, our publishers partners, our employees and our shareholders:

 

  1.

Innovation: We innovate by creating advertising experiences that respect the user experience and benefit publishers, brands and agencies.

 

  2.

Hard Work: Our main competitors are the digital advertising leaders such as YouTube and Facebook. The only way to win is by working twice as hard as them.

 

  3.

Elegance: We aim to deliver the most elegant solutions in the advertising sector across the world’s most prestigious publishers.

 

  4.

Entrepreneurship: We are a fast growing company built with entrepreneurship at its heart. Everybody at Teads is listened to, respected and rewarded for their contributions.

 

  5.

Passion: We are passionate about technology and advertising, and we believe we can build the most successful independent advertising company in the world.

 

  6.

Trust: We put a lot of trust in our team. We motivate everyone by giving them responsibilities and trusting them to deliver. Trusting each other makes us stronger.

 

  7.

We Love Media: We aim to be a positive force in the media ecosystem, promoting a clean advertising environment through viewability, brand safety and fraud-free inventory.

 

  8.

Social Purpose: In addition to being a positive force in the media industry, we believe in fostering a just and equitable environment at work and in society at large for people of all backgrounds.

 

  9.

Dedication to Customers: We are obsessed with making our customers happy. We work hard to deliver the best technology and the best customer service every single day.

 

  10.

Playing to Win: We consider our business a game that we love to play, and a game we plan to win. And we have fun along the way.

Our Core Strengths

Quality. We are known in the industry as “the” quality provider and quality defines who we are. We invented a solution that provides a quality user experience for consumers on quality publishers, attracting quality advertisers. We power this curated ecosystem with a quality end-to-end solution that incorporates quality data, quality creativity and quality service. We believe this is the key differentiator for Teads in the industry.

Fully Integrated, End-to-End Platform That Provides Greater Efficiency, Effectiveness and Innovation for Our Customers and Publishers. Teads Global Media Platform connects the world’s leading advertisers and their agencies through a single access point to differentiated and exclusive publisher inventory in one end-to-end integrated environment. We offer our customers a comprehensive suite of products, purpose-built to work together seamlessly, leveraging open source tools as well as our proprietary machine learning algorithms across the value chain. This seamless integration, together with the data and insights sourced from our end-to-end model, significantly reduces the complexity and cost to our customers of the otherwise fragmented Open Web experience. We believe our end-to-end solution also allows our product and engineering team to innovate faster than our competition, who must rely on dozens of integrations with third-party technology partners whenever they want to roll out a new innovation. We believe the combination of these advantages increases customer ROI, maximizes publisher monetization and drives our superior financial performance.

Diverse and Engaged Customer Base of Global Advertisers and Premier Agencies. We are deeply integrated in the agency ecosystem, including the largest global agency groups. These agencies typically act as the agency of record for the advertisers, even when the decision making is advertiser-directed. As of

 

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December 31, 2020, we work with approximately 2,000 agencies and advertisers who spend a minimum of $1,000 annually with us. Our advertiser customers are highly diverse by geography and by industry. We enjoy high customer retention; our Gross Customer Retention Rate was 94% in each of the years ended December 31, 2019 and December 31, 2020, a strong performance considering the impact of the COVID-19 pandemic, and we have steadily grown both the number of customer relationships (from approximately 1,150 customers in 2016 to approximately 2,000 in 2020).

Exclusive Partnerships with Premium Publishers at Scale. We benefit from longstanding partnerships with many of the world’s leading publishers, allowing us to reach 1.9 billion unique monthly users worldwide (as of April 2021). As of March 31, 2021, we had about 3,100 editorial publishers on our platform, representing more than 15,000 web and app properties that provide access to more than one trillion ad opportunities every year. Over 80% of our publisher relationships are contractually exclusive to Teads for outstream video advertising. In the year ended December 31, 2020, our Publisher Retention Rate was approximately 99% and we have an average publisher relationship length over five years for our top 50 publishers. Our full-stack monetization capabilities, track record of delivering strong outcomes and the trust that we have earned with our partners are critical to establishing our exclusive engagements.

Comprehensive Suite of Solutions Powered by a Culture of Innovation. We are built upon a history and culture of innovation, having pioneered outstream digital video ads with Teads InRead, which we believe is the market’s leading outstream product. We offer a comprehensive suite of solutions to advertisers and their agencies, comprising our buying interface (Teads Ad Manager), creative tools (Teads Studio), powerful audience targeting capabilities (Teads Audiences), guaranteed outcome pricing options enabled by our innovative prediction models and both branding and performance advertising. For publishers, we offer Teads for Publishers, a full monetization platform that includes our proprietary SSP, ad server, video player and all the solutions that our customers have access to as well. Our innovative culture allows us to continually evolve our products to anticipate the future needs of customers and publishers.

Truly Global Footprint with Opportunities for Growth in All Regions. Unlike many digital advertising companies that tend to be strong in only a few markets with limited presence and penetration in most other markets, we have built strong infrastructure, teams, partnerships and customer bases in most major digital advertising markets globally. Our revenue (after intersegment, i.e. DSP revenue reallocation) is proportionally split to match the size of the market opportunity in each market/region: 40.1% in Canada and the U.S. (“North America”), 46.6% in Europe, the Middle East and Africa (“EMEA”), 6.9% in Asia Pacific, and 6.4% in South America for the year ended December 31, 2020. We are also uniquely positioned as a global premium provider because we have significant premium publisher partnerships in all markets in which we operate, which is a result of strong publisher development teams based locally in each market and region. We believe each region and each market has significant growth potential and we can leverage assets we have built in these markets for growth.

Simplified Approach to Data-Driven Dynamic Creatives. Teads Studio, our main creative tool, offers an integrated creative and data platform to enable advertisers to easily personalize their creatives based on dynamic signals, such as time, location, weather, device or audience segment. Moreover, we offer pre- and post-testing tools to determine the best creative decisions and work closely with creative teams to understand their specific objectives in reaching and engaging the target audience. The scope of our creative capabilities extends to dynamic creative optimization, interactive display and augmented reality – all with a singular focus on driving superior outcomes for our customers and partners.

Highly Scalable, Cloud-Based Technology Platform. Technology is at the heart of our business. Our platform was built in-house by our software engineers, based on open-source technologies and is highly scalable. We host our systems in the cloud, primarily on Amazon AWS and Google Cloud Platform, allowing us to run a highly cost-effective platform that supports campaigns and targets users globally. We collect enormous amounts of data, including more than 100 billion data points per day from our 1.9 billion unique monthly users (as of April 2021). We leverage our scale data and data science capabilities to inform 50 prediction models,

 

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which we believe improve advertiser ROI and enable unique advertiser offerings like guaranteed outcome pricing options. Furthermore, our algorithms allow us to predict users’ behavior on our publisher partners’ pages with a sufficient degree of certainty to enable us to sell content on a guaranteed performance basis, which is a key differentiator in the industry.

Innovative, Privacy First Approach to Consumer Targeting Positions Us Favorably for a Cookieless World and Other Industry Changes Related to Identity. Aligned with our respectful user experience in our advertising formats, we take a privacy-first approach to the consumer. As our industry grapples with the challenges of the deprecation of cookies for targeting and tracking, we have taken a proactive approach to building cookieless solutions that respect consumer privacy. There are several structural and operational factors driving our approach. Being integrated with the best content, we have always leveraged the context of an article to ensure relevance to an ad that will appear next to it. By analyzing the content semantically, we can develop audience profiles in real-time without a cookie. Our direct integrations with our publisher partners allows us access to more data signals not tied to a user ID that can feed our advanced machine learning algorithms. We believe we are one of the few in the industry to leverage Google’s Privacy Sandbox solution, which allows us to target users without unique identifiers on the Chrome browser. Google recently announced that they will not use email identifiers in their solutions for the Open Web. Many of our peers had adopted email identifiers as their alternative to cookies, which is undermined by Google’s position. Teads’ cookieless strategy does not rely on email identifiers so we are not affected. We believe our cookieless solutions are very effective. According to Nielsen DAR, using our cookieless technology for real-time demographic targeting demonstrates 25% greater accuracy in comparison to classic cookie-based data segments.

Unique Combination of Scale and Profitability. We have grown our revenue to $540.3 million in 2020 and $126.6 million in the three months ended March 31, 2021, which makes us one of the largest advertising technology companies in the industry. At the same time, we have also achieved a profit for the year/period of $111.5 million in the year ended December 31, 2020, which represents a 20.6% profit margin, and $28.0 million in the three months ended March 31, 2021, which represents a 22.1% profit margin, and an Adjusted EBITDA* of $173.8 million in 2020, which represents 32.2% of our revenue for the corresponding period, and $38.7 million in the three months ended March 31, 2021, which represents 31% of our revenue for the corresponding period. We believe that our performance is made possible by our end-to-end platform, significant scale, long-standing customer and publisher relationships and lean, capital-efficient operations.

Proven, Founder Led Management Team, Backed by Best in Class Organization. Teads S.A. was founded approximately 15 years ago by Pierre Chappaz and Bertrand Quesada, based on a culture of continuous innovation in the advertising industry. Since then, we have expanded to 36 offices in 23 countries, employing approximately 820 employees as of March 31, 2021, and generating $540.3 million of revenue in the year ended December 31, 2020 and $126.6 million of revenue in the three months ended March 31, 2021. The original founding team continues to lead the Company today, and we have complemented our management team with a talented group of managers based around the world. We believe the quality of our people and the continued entrepreneurial culture bestowed by our founders provide a powerful differentiator in the industry.

Growth Strategy

We believe that we are in the early stages of growth and see significant upside for the business and industry overall. We plan to leverage our leading brand and positioning to pursue several long-term growth initiatives:

Increase Sales From Existing Customer Base. Our comprehensive portfolio of digital advertising solutions has grown to encompass a variety of display and video products as well as branding and performance advertising formats. We believe we can increase sales to existing advertiser and agency customers by capturing

 

*

Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see “Summary Historical Consolidated Financial and Other Data.”

 

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additional advertising spend across our portfolio of products and solutions. For example, many of our customers first used our platform for brand advertising and have now started to use us for performance advertising campaigns, increasing our share of their total advertising spend. Additionally, as customers seek to shift more spend away from the Walled Gardens, they will require quality inventory and a single access point to this inventory, which our Curated Internet ecosystem aims to provide.

Acquire New Customers and Publisher Partners. We plan to continue acquiring new high-quality publishers and advertisers and agencies around the world. We believe our scaled premium demand and full stack monetization platform offers publishers a clear value proposition. We expect to increase our market share among global advertisers and agencies through our ability to increase ROI through our portfolio of leading advertiser-centric solutions and by providing a single point of access to the world’s best publishers.

Expand Customer Base Internationally. As the global advertising landscape becomes more sophisticated, we plan to focus on high-growth markets where Teads is under-indexed. We believe we have formed a leadership position in the EMEA and U.S. markets and anticipate using this experience to be a leader in new geographies. Believing that Asia Pacific represents our fastest-growing market opportunity, we launched our Singapore and Tokyo offices four years ago. The Asia Pacific market remains underpenetrated, despite already experiencing substantial growth since our entry.

Grow Our Performance Advertising Business. Performance advertising addresses the needs of our advertiser customers who focus on linking ad spend to measurable outcomes and deeper user engagement, including leads, sales and mobile app installs. As our customers shift ad budgets to performance-based advertising, we believe we are well-positioned to capture more of their spend. Our leadership in ad viewability, optimizing creatives and measuring outcomes and our ability to optimize outcomes with machine learning positions us favorably in performance advertising. From launch three years ago, our performance advertising business is now a significant driver of our growth.

Continue to Innovate Our Solutions While Accessing New, Quality Supply Sources. We intend to extend our inventory sources and gain exposure to large and high-growth segments of digital advertising, including:

 

   

Connected TV (CTV): We are investing in new technologies to capture the ongoing shift of ad budgets from linear TV to CTV. We believe our premium positioning, strong legacy in brand awareness advertising, existing partnerships with customers and publishers and an end-to-end digital advertising platform is uniquely aligned with CTV and will allow us to enter the segment more easily and with a strong, differentiated positioning.

 

   

Mobile Apps: The mobile in-app ad market represents a compelling and complementary inventory source for us to provide to our customers. We believe we can leverage our premium positioning to secure app-focused publishers who seek more premium demand. We believe we can also leverage our performance advertising capabilities and data science expertise to effectively compete in the performance heavy in-app ecosystem.

Pursue M&A to Create Value. Our industry is highly fragmented, with many undercapitalized players and point-solutions. We believe we are well-positioned to identify and acquire market share or new capabilities as the industry consolidates to fewer, more scaled platforms.

Risk Factors

Our business is subject to many risks, which are highlighted in the section entitled “Risk Factors” immediately following this prospectus summary. Some of these risks include:

 

   

Our failure to maintain and grow our relationships with customers and publishers and increase spend through our platform may negatively impact our revenue and business.

 

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We face intense competition from companies that offer services similar or competitive to ours. If we are unable to differentiate to compete effectively or continue to improve our competitive advantages over existing and new businesses with similar or competing business models, our business, financial performance, financial condition and cash flows could be materially adversely impacted.

 

   

Our ability to grow and maintain our profitability could be materially affected if changes in technology and customer expectations outpace our service offerings and the development of our internal tools and processes, which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

 

   

If we fail to innovate and make the right investment decisions in our offerings and platform, we may not attract and retain advertisers, advertising agencies or publishers and our revenue and results of operations may decline.

 

   

We, our customers and our publisher partners are subject to laws and regulations globally, including those related to data privacy, data protection, and information security, and consumer protection across different markets where we conduct our business, including in the U.S. and Europe and industry requirements and such laws, regulations and industry requirements are constantly evolving and changing. Our actual or perceived failure to comply with such obligations could have an adverse effect on our business, results of operations and financial condition.

 

   

If we are unable to meet publisher quality standards for which advertisements appear on their sites, our relationships with publishers may suffer which could adversely affect our business, results of operations, and financial condition.

 

   

Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and operating results.

 

   

If we fail to detect or prevent fraud on our platform, or malware intrusions into the systems or devices of our publisher partners and their consumers, advertisers and publishers could lose confidence in our platform, and we could face legal claims that could adversely affect our business, results of operations, and financial condition.

 

   

If we fail to maintain a consistently high level of service experience and implement and communicate high-quality corporate sustainability and social purpose activities, our ability to attract new and retain existing customers and team members could be adversely affected.

 

   

Our business and financial results have been and will continue to be adversely affected by the COVID-19 pandemic and could be adversely affected by another global pandemic or economic and geopolitical conditions, which could negatively affect our customers’ and partners’ businesses and levels of business activity, demand for our services as well as our and our customers’ and partners’ liquidity and access to capital.

 

   

We must scale our platform infrastructure to support anticipated growth and transaction volume. If we fail to do so, we may limit our ability to process ad impressions, and we may lose revenue.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

 

   

an exemption that allows us to include less than five years of audited financial statements in connection with this offering; and

 

   

an exemption from the auditor attestation requirement on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

 

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We may choose to take advantage of some, but not all, of these reduced requirements, and therefore the information that we provide holders of Class A Shares may be different than the information you might receive from other public companies in which you hold equity. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. We currently prepare our consolidated financial statements in accordance with IFRS as issued by the IASB, so we are unable to make use of the extended transition period. We will comply with new or revised accounting standards on or before the relevant dates on which adoption of such standards is required by the IASB.

We may take advantage of these provisions until we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of the following:

 

   

the last day of the first fiscal year in which our annual revenues were at least $1.07 billion;

 

   

the last day of the fiscal year following the fifth anniversary of this offering;

 

   

the date on which we have issued more than $1 billion of non-convertible debt securities over a three-year period; and

 

   

the last day of the fiscal year during which we meet the following conditions: (i) the worldwide market value of our common equity securities held by non-affiliates as of our most recently completed second fiscal quarter is at least $700 million; (ii) we have been subject to U.S. public company reporting requirements for at least 12 months; and (iii) we have filed at least one annual report as a U.S. public company.

Upon the effectiveness of the registration statement of which this prospectus forms a part, we will report under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as a non-U.S. company with foreign private issuer status. As long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

   

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

 

   

the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

   

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.

In addition, we will not be required to file annual reports and financial statements with the SEC as promptly or using the same forms as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with certain other rules and regulations under U.S. securities laws applicable to U.S. domestic companies whose securities are registered under the Exchange Act, including Regulation FD, which restricts the selective disclosure of material information.

So long as we remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are not foreign private issuers.

Corporate Reorganization

We were incorporated pursuant to the laws of the Netherlands as Altice Temp B.V. on May 14, 2021 and were renamed Teads B.V. on July 2, 2021 to become a holding company for the Teads businesses. Pursuant to the terms of a corporate reorganization that will be completed prior to the closing of this offering, all issued and

 

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outstanding shares in Teads S.A. will be contributed and transferred to Teads B.V. in exchange for newly issued Class A Shares and Class B Shares of Teads B.V. and a vendor note and, as a result, Teads S.A. will become a wholly-owned subsidiary of Teads B.V. Following this step, Altice Teads S.A., the sole shareholder of Teads B.V. will be liquidated and as a result, the current direct and indirect shareholders of Altice Teads S.A., being Altice International, Yosemite 1 S.A. and Yosemite 2 S.A., will become Teads B.V.’s direct shareholders. Following the liquidation of Altice Teads S.A., Yosemite 1 S.A. and Yosemite 2 S.A. will merge with and into Teads B.V. and as a result Yosemite 1 S.A.’s and Yosemite 2 S.A.’s shareholders will be allotted shares in Teads B.V. Lastly, Teads B.V. will be converted into a public company (naamloze vennootschap) whereby its name will be changed from Teads B.V. to Teads N.V.

The following diagram shows our organizational structure after giving effect to the corporate reorganization and this offering, assuming no exercise by the underwriters of their option to purchase additional Class A Shares.

 

LOGO

1 Altice International is an indirect subsidiary of New Altice Europe B.V. in liquidatie (“New Altice Europe”). Next Alt, a personal holding company of which Patrick Drahi is the sole indirect controlling shareholder, indirectly holds 100% of the share capital and voting rights of New Altice Europe, which indirectly owns 92.76% of the share capital and voting rights of Altice International. As such, Patrick Drahi may be deemed to beneficially own all of the Common Shares held by Altice International. New Altice Europe has been dissolved and its assets and liabilities will be liquidated as part of an ordinary corporate reorganization. Following the completion of New Altice Europe’s liquidation procedures, which is expected to take place in the coming months, New Altice Europe will cease to exist and Next Private B.V., a wholly owned subsidiary of Next Alt, being New Altice Europe’s direct 100% shareholder, will indirectly hold the shares in Altice International.

2 Consists of Pierre Chappaz, Bertrand Quesada and certain of our current employees, including members of our senior management. See “Principal and Selling Shareholders” for more information.

Corporate Information

Our principal executive offices are located at Danzigerkade 15B, 1013 AP Amsterdam, the Netherlands, and our telephone number is +31 (0)6 2157 3727. Our website address is www.teads.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus and inclusions of our website address in this prospectus are inactive textual references only.

“Teads” and our other registered or trade names, trademarks, or service marks appearing in this prospectus are our property. Other trademarks and trade names referred to in this prospectus are the property of their respective owners.

 

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The Offering

 

Issuer

Teads N.V.

 

Class A Shares offered by the selling shareholders

38,500,000 Class A Shares (or 44,275,000 Class A Shares, if the underwriters exercise their option to purchase additional Class A Shares in full).

 

Common shares to be outstanding immediately after this offering

238,095,240 Common Shares, consisting of 66,866,544 Class A Shares (or 71,820,865 Class A Shares, if the underwriters exercise their option to purchase additional Class A Shares in full) and 171,228,696 Class B Shares (or 166,274,375 Class B Shares if the underwriters exercise their option to purchase additional Class A Shares in full)

 

Option to purchase additional Class A Shares

The selling shareholders have granted the underwriters an option to purchase up to 5,775,000 additional Class A Shares. The underwriters may exercise this option at any time within 30 days from the date of this prospectus. See “Underwriting.”

 

Use of Proceeds

We will not receive any of the proceeds from the Class A Shares sold by the selling shareholders.

 

  See “Use of Proceeds.”

 

Directed Share Program

At our request, the underwriters have reserved up to 5% of the Class A Shares offered hereby for sale at the initial public offering price to certain of our directors, officers, employees, and friends and family of our directors, officers and employees. The sales will be made by Morgan Stanley & Co. LLC, an underwriter of this offering, and its affiliates through a directed share program. We do not know if these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other Class A Shares offered hereby. Any shares purchased by our directors and officers in the directed share program will be subject to a 180-day lock-up period, and any shares purchased by other persons in our directed share program will be subject to a 35-day lock-up period.

 

Voting

Upon closing of this offering, we will have two classes of common shares: Class A Shares and Class B Shares. Each Class A Share will be entitled to one vote. Each Class B Share will be entitled to 25 votes and will be convertible at any time upon request into 25 Class A Shares but the converting shareholder will be obligated to transfer 24 Class A Shares to the Company so that the converting shareholder will effectively only acquire one Class A Share pursuant to a conversion. Altice International, the holder of our outstanding Class B Shares will hold approximately 98.5% of the voting rights on our issued and outstanding share capital immediately following this offering.

 

Dividends

We do not currently anticipate paying dividends on our Class A Shares or Class B Shares. Any declaration and payment of future dividends to holders of our Class A Shares or Class B Shares will be

 

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at the sole discretion of our board of directors and will depend on many factors, including our financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our board of directors deems relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries. Dutch law imposes requirements that may restrict our ability to pay dividends. See “Dividend Policy.”

 

Registration Rights Agreement

In connection with the closing of this offering, we will have a registration rights agreement with Altice International and our founders. This agreement will provide to Altice International an unlimited number of “demand” registrations for the registration of the sale of our Class A Shares in the minimum aggregate amount of $75,000,000 provided that Altice International holds at least 10% of the registrable securities then outstanding. Additionally, the agreement will provide customary “piggyback” registration rights to Altice International and our founders. We will be obligated to file a shelf registration statement upon request by Altice International once we are eligible to register on Form F-3. Our founders will be able to request participation in any registrations in which Altice International participates. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement.”

 

Proposed Symbol

“TEAD”

 

Risk Factors

See “Risk Factors” for a discussion of factors you should carefully consider before deciding to invest in our Class A Shares.

The number of Class A Shares to be outstanding immediately after this offering excludes:

 

   

23,816,700 Class A Shares issuable upon exercise of stock options to be issued under the Teads N.V. 2021 Stock Option Plan (the “2021 SOP”) in connection with the closing of this offering at an exercise price equal to the fair market value on the date of grant; and

 

   

4,861,438 Class A Shares reserved for issuance upon exercise of stock options that may be issued under the 2021 SOP in the future.

Unless otherwise indicated, the information in this prospectus assumes the following:

 

   

an initial public offering price of $19.50 per Class A Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus;

 

   

no exercise by the underwriters of their option to purchase additional Class A Shares; and

 

   

the completion, prior to the closing of this offering, of our corporate reorganization described above.

 

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables present summary historical consolidated financial data of Teads S.A.

The consolidated statements of operations for the years ended December 31, 2020 and 2019, the consolidated statements of comprehensive income for the years ended December 31, 2020 and 2019, the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of changes in equity as of December 31, 2020 and 2019 and the consolidated statements of cash flows for the years ended December 31, 2020 and 2019 have been derived from Teads S.A.’s audited financial statements included elsewhere in this prospectus. The unaudited condensed interim consolidated statements of operations for the three months ended March 31, 2021 and 2020, the unaudited condensed interim consolidated statements of comprehensive income for the three months ended March 31, 2021 and 2020, the unaudited condensed interim consolidated balance sheet as of March 31, 2021, the unaudited condensed interim consolidated statements of changes in equity as at March 31, 2021 and 2020 and the unaudited condensed interim consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 have been derived from Teads S.A.’s unaudited condensed interim consolidated financial statements included elsewhere in this prospectus.

You should read the summary financial data presented below in conjunction with the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the related notes of Teads S.A. included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that should be expected in any future period.

 

Consolidated Statements of Operations:

   Years Ended
December 31
    Three Months
Ended March 31,
 

(in thousands of USD)

   2020     2019     2021     2020  

Revenue

     540,273       509,513       126,592       95,566  

Cost of revenue

     (253,138     (281,665     (56,753     (60,128

Technology and development expenses

     (16,037     (14,894     (3,917     (3,875

Sales and marketing expenses

     (76,792     (104,230     (21,722     (20,629

General and administrative expenses

     (24,949     (27,519     (7,058     (5,415

Profit from operations

     169,357       81,205       37,142       5,519  

Change in value of contingent consideration

     (2,798                  

Financial (cost) income

     (8,523     550       690       (4,523

Profit before tax

     158,036       81,755       37,832       996  

Income tax expense

     (46,523     (26,485     (9,809     (2,041

Profit (loss) for the year/period

     111,513       55,270       28,023       (1,045

Attributable to non-controlling interests

     (5     (1     (3     (1

Attributable to owners of the Company

     111,508       55,269       28,027       (1,044

Earnings per share (in USD)

        

Basic

     222.97       110.52       56.03       (2.09

Diluted

     175.12       86.80       44.00       (2.09

 

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Consolidated Statements of Balance Sheet Data:

   As at December 31,      As at
March 31,
 

ASSETS (in thousands of USD)

   2020      2019      2021  

Goodwill

     40,538        37,236        38,963  

Intangible assets

     9,804        5,162        10,048  

Right-of-use assets

     23,494        22,634        24,711  

Property, plant and equipment

     6,352        5,980        6,047  

Financial assets

     169,590        93,586        194,958  

Other non-current assets

            6         

Deferred tax assets

     4,089        3,062        3,272  

Non-current assets

     253,867        167,665        277,999  

Trade receivables

     250,038        206,480        194,765  

Other receivables

     26,803        26,859        20,216  

Cash and cash equivalents

     58,390        20,951        53,087  

Current assets

     335,231        254,291        268,069  

Total assets

     589,098        421,956        546,068  

 

     As at
December 31,
    As at
March 31,
 

EQUITY AND LIABILITIES (in thousands of USD)

   2020     2019     2021  

Share capital

     17,379       17,379       17,379  

Share premium

     115,691       115,691       115,691  

Retained earnings

     226,815       114,935       254,841  

Reserves

     (15,487     (29,535     (22,620

Equity attributable to owners of the Company

     344,397       218,470       365,290  

Non-controlling interests

     10       4       7  

Total equity

     344,407       218,474       365,297  

Long-term borrowings

     19       5        

Lease liabilities

     21,458       20,900       22,303  

Non-current provisions

     2,084       1,151       1,982  

Deferred tax liabilities

     154       197       184  

Other non-current liabilities

     54       4,135       54  

Non-current liabilities

     23,769       26,388       24,523  

Trade and other payables

     135,664       118,295       89,015  

Short-term borrowings

     243       580       49  

Lease liabilities

     4,045       2,809       4,578  

Current tax liabilities

     21,371       12,219       14,481  

Contract liabilities

     5,153       4,950       2,698  

Other current liabilities

     54,446       38,243       45,426  

Current liabilities

     220,922       177,094       156,247  

Total equity and liabilities

     589,098       421,956       546,068  

Non-GAAP and Other Data

      

Adjusted EBITDA(1)

     173,812       94,368       38,748  

Customers >$1,000 of revenue(2)

     1,995       1,987       N/A  

Gross Customer Retention Rate(3)

     94     94     N/A  

Publisher Retention Rate(4)

     99     N/A       N/A  

 

(1)

Adjusted EBITDA is defined as operating income before depreciation and amortization, other expenses and income (capital gains, non-recurring litigation, restructuring costs) and share-based expenses. This may not be comparable to similarly titled measures used by other entities. Further, this measure should not be considered as an alternative for operating income as the effects of depreciation, amortization and impairment, excluded from Adjusted EBITDA, do ultimately affect the operating results. We believe Adjusted EBITDA is an appropriate measure for evaluating the operating performance of the Company. Adjusted EBITDA and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use revenue and Adjusted EBITDA measures as important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. We believe Adjusted EBITDA provides management and investors a useful measure for period-to-period comparisons of our core business and operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operating results.

 

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The following is a reconciliation of profit (loss) for the year/period to Adjusted EBITDA:

 

     Years Ended
December 31,
    Three Months
Ended March 31,
 
     2020     2019     2021     2020  
     (in thousands of USD)  

Profit (loss) for the year/period

     111,513       55,270       28,023       (1,045

Income tax expense

     (46,523     (26,485     (9,809     (2,041

Financial (cost) income

     (8,523     550       690       (4,523

Change in value of contingent consideration

     (2,798                  

Retention bonus*

           (9,910            

Depreciation and amortization

     (4,455     (3,253     (1,605)       (895

Adjusted EBITDA

     173,812       94,368       38,748       6,414  

 

* In 2019, the Company accrued retention bonuses for certain managers (as provided for in the share purchase agreement relating to the acquisition of Teads S.A. by Altice International in 2017) that were paid in January 2020.

 

(2)

Consists of the aggregate number of customers that contributed more than $1,000 of revenue in the trailing 12 months.

(3)

We define gross customer retention as of a period end as customers who spent more than $150,000 with us in the prior period and who continued to be customers in the current period irrespective of their spending, expressed as a percentage (such rate, the “Gross Customer Retention Rate”).

(4)

We define publisher retention as of a period end as the number of our top 500 publishers retained from the prior period end (such rate, the “Publisher Retention Rate”).

Recent Developments

Estimated Preliminary Results for the Three Months Ended June 30, 2021 (unaudited)

Set forth below are certain preliminary and unaudited estimates of selected financial and other information for the three months ended June 30, 2021 and actual unaudited financial and other information for the three months ended June 30, 2020. The unaudited selected financial and other information for the three months ended June 30, 2021 reflects our preliminary estimates with respect to such results based on currently available information, is not a comprehensive statement of our financial results and is subject to completion of our financial closing procedures. Our financial closing procedures for the three months ended June 30, 2021 are not yet complete and, as a result, our actual results may differ from these estimates. These estimates should not be viewed as a substitute for our full interim or annual financial statements prepared in accordance with IFRS. Further, our preliminary estimated results are not necessarily indicative of the results to be expected for any future period as a result of various factors, including, but not limited to, those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” This information should be read in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for prior periods included elsewhere in this prospectus.

The preliminary estimates presented below have been prepared by, and are the responsibility of, management. Deloitte Audit S.à r.l., our independent registered public accounting firm, has not audited, reviewed, compiled, or performed any procedures with respect to the preliminary financial information. Accordingly, Deloitte Audit S.à r.l. does not express an opinion or any other form of assurance with respect thereto.

 

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     Three Months
Ended
June 30, 2020
     Three Months Ended
June 30, 2021
 
     Actual      Low
(estimated)
     High
(estimated)
 
     (unaudited, in thousands of USD)  

Revenue

   $ 90,854      $ 161,000      $ 165,000  

Profit (loss) for the year/period

   $ 18,155      $ 34,600      $ 35,600  

Non-GAAP Financial Measures:

        

Adjusted EBITDA

   $ 26,326      $ 54,000      $ 56,000  

The following table provides reconciliations of our preliminary estimates of Adjusted EBITDA for the three months ended June 30, 2021:

 

     Three Months
Ended
June 30, 2020
    Three Months Ended
June 30, 2021
 
     Actual     Low
(estimated)
    High
(estimated)
 

Revenue

   $ 90,854     $ 161,000     $ 165,000  

Profit (loss) for the period

   $ 18,155     $ 34,600     $ 35,600  

Income tax expense

   $ (7,162   $ (13,000   $ (14,000

Financial (cost) income

   $ 19,000     $ (1,800   $ (1,800

IPO and other costs

     —       $ (3,400   $ (3,400

Depreciation and amortization

   $ (1,028   $ (1,200   $ (1,200

Adjusted EBITDA

   $ 26,326     $ 54,000     $ 56,000  

 

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RISK FACTORS

This offering and investing in our Class A Shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this prospectus, including our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our Class A Shares. Other risks and uncertainties that we do not presently consider to be material, or of which we are not presently aware, may become important factors that affect our future financial condition and financial performance. If any of those or the following risks actually occur, our business, financial condition, financial performance, liquidity and prospects could suffer materially, the trading price of our Class A Shares could decline and you could lose all or part of your investment. See also “Special Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

Our failure to maintain and grow our relationships with customers and publishers and increase spend through our platform may negatively impact our revenue and business.

To sustain or increase our revenue, we must regularly add new customers (agencies and advertisers) and encourage existing customers to maintain or increase the amount of advertising spend placed through our platform. If competitors introduce lower cost or differentiated offerings that compete with or are perceived to compete with ours, our ability to grow our business with new or existing customers could be impaired. It is possible that we may reach a point of saturation at which we cannot continue to grow our revenue because of internal limits that advertisers may place on the allocation of their advertising budgets to digital media to a particular provider or otherwise. Our customers typically have relationships with different providers and there is limited cost to moving budgets to our competitors. As a result, we may have limited visibility as to our future revenue streams. We cannot assure you that our customers will continue to use our platform or that we will be able to replace, in a timely or effective manner, departing customers with new customers and publishers that generate comparable revenue.

On the supply side, we are subject to the economic health and evolving business strategies of our publisher partners. We depend upon publishers to provide advertising space which we can offer to existing and prospective advertisers and agencies. While we have established exclusivity for outstream video with 80% of about 3,100 of our publisher partners, and have experienced a Publisher Retention Rate of approximately 99% in the year ended December 31, 2020, a decline in exclusivity levels or retention rates could have a material adverse effect on our ability to grow our revenues and execute on our strategy. If we fail to provide sufficient advertising demand and expected levels of monetization, our publisher partners may consider renegotiating the terms of our contractual exclusivity or establishing relationships with our competitors. Furthermore, independent publishers struggle to compete with the Walled Gardens, which has driven some publishers out of business. When independent publishers go out of business, we experience a decrease in our access to premium advertising inventory which may make our services less attractive to agencies and advertisers. Publishers may also opt to transition to a subscription model as an alternative method of providing their content which would not include advertisements, which would also contribute to a decrease in our access to premium inventory. A decline in the market for programmatic advertising or the failure of that market to grow as expected could also adversely affect our business, results of operations and financial condition. Any of these developments may adversely affect our business, results of operations and financial health.

We face intense competition from companies that offer services similar or competitive to ours. If we are unable to differentiate to compete effectively or continue to improve our competitive advantages over existing and new businesses with similar or competing business models, our business, financial performance, financial condition and cash flows could be materially adversely impacted.

The market for the services we offer to advertisers, agencies and publishers is competitive and we expect competition to intensify and increase from a number of our existing competitors, including the Walled

 

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Gardens such as Google and Facebook, as well as TikTok, Twitter, Snap, Verizon, Iron Source, Xandr, Taboola, TripleLift, SSPs and DSPs. Some of these existing and new competitors have greater financial, human and other resources, greater technological expertise, longer operating histories and more established relationships than we do. In addition, the continued digital expansion of the services we offer and the markets we operate in will result in new and different competitors, many of which may have significantly greater market recognition than we do in the markets we are entering, as well as increased competition with existing competitors who are also expanding their services to cover digital capabilities. Some advertisers and agencies have their own relationships with publishers or are seeking to establish such relationships, and may choose to buy advertising inventory directly from them rather than leverage all the capabilities of our platform. As we grow larger, we may face increased competition from the Walled Gardens should they choose to target our market share in the open Internet as a growth opportunity. If the Walled Gardens begin to compete more directly with us in this manner, it could have an adverse effect on our business, financial performance, financial condition and cash flows. Our inability to compete successfully against companies that offer services similar to ours could result in increased customer churn, revenue loss, pressures on recruitment and retention of team members, service price reductions and increased R&D, marketing and promotional expenses or reduced operating margins which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Introduction of competent, competitive products, pricing strategies or other technologies by other competitors that are superior to or that achieve greater market acceptance than our products and services could adversely affect our business. For example, a competitor may develop a superior method of presenting outstream video ads which may make our services less desirable for advertisers. In such event, we could experience a decline in market share and revenues and be forced to reduce our prices, resulting in lower net profits for us. Loss of existing or future market share to new competitors and increased price competition could substantially harm our business, results of operations and financial condition.

We also face competitive risks in our relationship with publishers. Although we currently have exclusivity for outstream video with over 80% of about 3,100 of our publishers, header bidding opportunities (whereby a publisher may offer ad space to numerous outlets at once) may lead publishers to exit their exclusive arrangements with us. We also face competition from alternative service providers who are able to compete directly with us on placements and who can offer revenue guarantees that are competitive with ours. If our partnerships with publishers decline or become nonexclusive, customers may choose to work with our competitors which could have a material adverse effect on our business, financial performance, financial condition and cash flows. Further, we may in the future face competition from powerful publishers or alliances of publishers that compete directly with us by building their own technology or using a competitive technology to sell outstream videos on their own or in combination with one of our competitors.

Further, we compete with other service providers for talent in some of the regions in which we operate, particularly where access to a qualified workforce is limited, which can impact our talent recruitment efforts and increase our attrition and labor cost. All of these factors present challenges for us in retaining and growing our business.

There has also been rapid evolution and consolidation in the advertising technology industry, and we expect these trends to continue, thereby increasing the capabilities and competitive posture of larger companies, particularly those that are already dominant in various ways, and enabling new or stronger competitors to emerge. We compete for both supply and demand with larger, well-established companies that may have technological advantages stemming from their experience in the market. We must continue to adapt and improve our technology to compete effectively, and customers have not always embraced our offering due to various factors, including switching costs from pre-existing technology integrations, and lack of awareness of our end-to-end offerings. Although we believe we provide superior accountability to such competitors, certain customers may make technological or financial demands that we are unable to meet. These and other factors may make it difficult for us to increase our business with our publisher partners and customers, cause some agencies or advertisers to reduce their spending with us or reduce the economies of scale and increase our costs of doing

 

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business, adversely affecting our business, results of operations and financial condition. Many publishers and customers are large consolidated organizations that may need to acquire other companies in order to grow. Smaller publishers and customers may need to consolidate in order to compete effectively. There is a finite number of large publishers and customers in our target markets, and any consolidation of publishers or customers may give the resulting enterprises greater bargaining power or result in the loss of publishers and customers that use our platform, reducing our potential base of publishers and customers, each of which would lead to erosion of our revenue.

Our ability to grow and maintain our profitability could be materially affected if changes in technology and customer expectations outpace our service offerings and the development of our internal tools and processes, which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Our growth, profitability and the diversity of our revenue sources will depend on our ability to develop and adopt new technologies to expand our existing offerings, proactively identify new revenue streams and improve cost efficiencies in our operations, all while meeting rapidly evolving customer expectations. Although we are focused on maintaining and enhancing the capabilities of our platform, we may not be successful in anticipating or responding to our customers’ expectations and interests in adopting evolving technology solutions and the integration of these technology solutions into our platform may not achieve the intended enhancements or cost reductions in our operations which may exert pressure on our gross margins as costs for our growing business increase. Our failure to innovate, maintain technological advantages or respond effectively and timely to changes in technology or to control costs or keep our pricing strategy private could have a material adverse effect on our business, financial performance, financial condition and cash flows.

If we fail to innovate and make the right investment decisions in our offerings and platform, we may not attract and retain advertisers, advertising agencies or publishers and our revenue and results of operations may decline.

Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction by our competitors of new and enhanced offerings. We must constantly make investment decisions regarding our existing and future offerings and technology to meet customer demand and evolving industry standards. We may make wrong decisions regarding these investments. If new or existing competitors have more attractive offerings, we may lose customers or customers may decrease their use of our platform. New customer or publisher demands, superior competitive offerings or new industry standards could require us to make unanticipated and costly changes to our platform or business model. If we fail to adapt to our rapidly changing industry or to evolving customer needs, demand for our platform could decrease and our business, financial condition and operating results may be adversely affected.

If we are unable to appropriately price our services to meet changing customer demands, our business, financial performance, financial condition and cash flows may be adversely affected.

The prices we are able to charge for our services are affected by a number of factors, including price competition, our ability to accurately estimate revenues from customer engagements, our ability to estimate resources and other costs for long-term pricing and cash flows for long-term contracts, our customers’ perceptions of our ability to add value through our services, introduction of new services or products by us or our competitors and general economic and political conditions. Therefore, if we are unable to appropriately price our services, there could be a material adverse effect on our business, financial performance, financial condition and cash flows.

In particular, as internet browsers deprecate third-party cookies, if our cookieless solutions do not perform as well as cookie-based solutions, our prices, along with the rest of the Open Web’s prices, may decline as customers place a lower value in less targetable inventory. In addition, privacy regulations may further restrict

 

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customers’ ability to run targeted advertising campaigns, which will lead to pricing decline since customers will want to pay less for less targeted advertising. See “ —We, our customers and our publisher partners are subject to laws and regulations globally, including those related to data privacy, data protection, information security, consumer protection across different markets where we conduct our business, including in the U.S. and Europe, and industry requirements and such laws, regulations and industry requirements are constantly evolving and changing. Our actual or perceived failure to comply with such obligations could have an adverse effect on our business, results of operations and financial condition.”

Advertisers may choose to shift more spend to Walled Gardens as third-party cookies are deprecated among independent publishers operating outside the Walled Gardens, which can adversely affect our business, results of operations, and financial condition.

In the last couple of years, Internet browsers have started deprecating third-party cookies, small text files placed by third-party technology companies like ours on consumers’ Internet browser when they arrive on a publisher’s page. These cookies are used to track a user for targeting purposes and measure performance of digital advertising campaigns without collecting nor processing personally identifiable information. This shift by Internet browsers stems from pressure from consumers and regulators to ensure the industry is respecting user privacy as some consumers and regulators deemed cookies to be impacting consumer privacy. This decline in the use of cookies limits advertising technology companies’ ability to track and target users, potentially resulting in advertising campaigns being less effective. Google has announced that by 2022, its Chrome browser will also block third-party cookies and will offer an alternative targeting solution that does not identify users individually. Though we have developed our own cookieless alternatives, there can be no guarantee that advertisers will find our alternative solutions to be effective, and the perception that our or other solutions are not effective may cause advertisers to shift more spend away from the open Internet and towards Walled Gardens such as Facebook and Google, which do not rely as much on cookies and are able to use logged-in user data for targeting and tracking purposes.

Our senior management team is critical to our continued success and the loss of one or more members of our senior management team could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Our future success substantially depends on the continued services and performance of the members of our senior management team, and key team members possessing technical and business capabilities, including industry expertise, that are difficult to replace. Specifically, the loss of the services of our executive leadership team, and in particular, Pierre Chappaz, Founder, or Bertrand Quesada, Co-Founder and Chief Executive Officer, could seriously impair our ability to continue to manage and expand our business. There is intense competition for experienced senior management and personnel with technical expertise and expertise in the industry in which we operate, and we may not be able to retain these officers or key team members. Although we have entered into employment and non-competition agreements with all of our executive officers, certain terms of those agreements may not be enforceable and in any event these agreements do not ensure the continued service of these executive officers.

In addition, we currently do not maintain “key person” insurance covering any member of our management team. The loss of any of our key team members, particularly to competitors, could have a material adverse effect on our business, financial performance, financial condition and cash flows.

The one-time appointment bonus granted to each of Pierre Chappaz and Bertrand Quesada is not conditional, including upon Pierre Chappaz or Bertrand Quesada, respectively, remaining executive director or otherwise being active within the Teads group.

The one-time appointment bonus in the amount of $20.6 million to be paid to each of Pierre Chappaz and Bertrand Quesada in May 2022, per a one-time agreement with each entered into on July 5, 2021, is

 

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non-forfeitable, and is not conditional upon Pierre Chappaz or Bertrand Quesada, respectively, remaining an executive director or otherwise remaining active within Teads. As a consequence, the amounts will be due and payable by the Company if Pierre Chappaz or Bertrand Quesada resigns as executive director or leaves Teads at any time, including prior to the closing of this offering. Additionally, the amount due to Pierre Chappaz could be greater than the amounts listed above due to the Company’s obligation to gross up the appointment bonus for all Dutch income taxes that will become due by him and all Dutch wage withholding taxes to be withheld by the Company on his behalf in connection with this bonus. See “Management—Teads Compensation—Bonus Payments.”

The one-time fee granted to Pierre Chappaz is not subject to any further conditions, including closing of this offering.

The one-time fee in the amount of $35.3 million to be paid to Pierre Chappaz in October 2022 is non-forfeitable, and is not conditional upon the closing of this offering. While the Company does not expect any Dutch income taxes and Dutch wage withholding taxes will be due in connection with this fee, if any such taxes would be due or have to be withheld on his behalf, the Company will gross up the one-time fee to cover these taxes as well as any related costs (including, but not limited to, late payment interest and penalties) as the case may be. The amount to be paid by the Company in connection with the fee plus any non-recoverable Dutch value added taxes may not be deductible for Dutch corporate income tax purposes. See “Certain Relationships and Related Party Transactions—Relationship with Certain Team Members—Pierre Chappaz Fee.”

We, our customers and our publisher partners are subject to laws and regulations globally, including those related to data privacy, data protection, information security, consumer protection across different markets where we conduct our business, including in the U.S. and Europe, and industry requirements and such laws, regulations and industry requirements are constantly evolving and changing. Our actual or perceived failure to comply with such obligations could have an adverse effect on our business, results of operations and financial condition.

The jurisdictions where we operate, as well as our contracts, require us to comply with or facilitate our customers’ and partners’ compliance with numerous, complex and sometimes conflicting legal regimes, both domestically and internationally. These laws and regulations relate to a number of aspects of our business, including anti-corruption, internal and disclosure control obligations, data privacy and protection, wage-and-hour standards, employment and labor relations, trade protections and restrictions, import and export control, tariffs, taxation, sanctions, data, information and transaction processing security, records management, privacy and security practices, data residency, corporate governance, anti-trust and competition, team member and third-party complaints, government affairs and other regulatory requirements affecting trade and investment. Failure to perform our services in a manner that complies with any such requirements could result in breaches of contracts with our customers. The application of these laws and regulations to our customers is often unclear and may at times conflict. Further, some regulators have considered placing limits or bans on outstream videos due to bandwidth and energy consumption concerns. Such limits or bans could have an adverse effect on our business, results of operations and financial condition. The global nature of our operations increases the difficulty of compliance. For example, in many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by regulations applicable to us or our customers, including the U.S. Foreign Corrupt Practices Act. We cannot provide assurance that our customers will not take actions in violation of our internal policies or U.S. laws.

In order to provide our products and services, we also receive, store and process data about, or related to, our customers, publisher partners, employees and services providers, and so are subject to a variety of data privacy laws and regulations as well as contractual obligations, which may include obligations to conform to industry standards.

 

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The U.S. federal and various state and foreign governments have adopted or proposed limitations and restrictions on the collection, distribution, use and storage of data relating to individuals, including the use of such data for marketing, advertising and other communications with individuals and businesses. In the U.S., various laws and regulations apply to the collection, processing, disclosure and security of certain types of data. Additionally, the Federal Trade Commission and many state attorneys general have interpreted federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. If we fail to comply with any such laws or regulations, we may be subject to enforcement actions that may not only expose us to litigation, fines and civil and/or criminal penalties, but also require us to change our business practices as well as have an adverse effect on our business, results of operations and financial condition. Additionally, if we face such enforcement actions or other penalties, we may suffer a reputational risk that could have an adverse effect on our business, results of operations and financial condition.

The regulatory framework for data privacy issues worldwide is currently evolving and is likely to remain uncertain for the foreseeable future. The occurrence of unanticipated events often rapidly drives the adoption of legislation or regulation affecting the use, collection or other processing of data, and may affect the manner in which we conduct our business. Restrictions could be placed upon the collection, management, aggregation and use of personal information, or certain categories thereof, which could result in a material increase in the cost of collecting or otherwise obtaining such data and could limit the ways in which we may use or disclose information. In particular, interest-based advertising, or the use of data to draw inferences about a user’s interests and deliver relevant advertising to that user, and similar or related practices (sometimes referred to as behavioral advertising or personalized advertising), such as cross-device data collection and aggregation, and the use and distribution of de-identified and indirect data resulting therefrom, including for purposes of personalization and the targeting of advertisements, have come under increasing scrutiny by legislative, regulatory and self-regulatory bodies in the U.S. and abroad that focus on consumer protection or data privacy. Much of this scrutiny has focused on the use of cookies and other technology to collect information about Internet users’ online browsing activity on web browsers, mobile devices and other devices, to associate such data with user or device identifiers or de-identified identities across devices and channels. Because we, and our customers and publishers, rely upon large volumes of such data collected primarily through cookies and similar technologies, it is possible that these efforts may have a substantial and adverse impact on our ability to collect and use data from Internet users, which could have an adverse effect on our business, results of operations and financial condition. It is essential that we monitor developments in this area domestically and globally, and engage in responsible privacy practices, including providing consumers with notice of the types of data we collect and how we use that data to provide our services. However, we cannot guarantee that these efforts will be sufficient to mitigate any adverse effect on our business caused by such changes in laws, regulations and industry standards.

In the U.S., the U.S. Congress and state legislatures, along with federal regulatory authorities, have recently increased their attention on matters concerning the collection and use of consumer data. For instance, the Federal Trade Commission has become increasingly aggressive in prosecuting alleged failure to secure personal data as unfair and deceptive acts or practices under the Federal Trade Commission Act. In the U.S., non-sensitive consumer data generally may be used under current rules and regulations, subject to certain restrictions, so long as the person does not affirmatively “opt-out” of the collection or use of such data. If an “opt-in” model or other more restrictive regulations were to be adopted in the U.S., less data would be available, and the cost of data would be higher. Such increased costs, as well as any increased compliance risks associated with such restrictive regulations, could have an adverse effect on our business, results of operations and financial condition.

California recently enacted the CCPA, which creates individual privacy rights for California residents and increases the privacy and security obligations of businesses handling personal data. The CCPA is enforceable by the California Attorney General and provides for civil penalties and a private right of action relating to certain data security incidents, in each case, as a result of an entity’s non-compliance with the CCPA. The CCPA generally requires covered businesses to, among other things, provide new disclosures to California consumers and afford California consumers new abilities to opt-out of certain sales of personal information, a concept that is

 

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defined broadly, and although formal guidance has not been issued, behavioral advertising is believed to be a sale under CCPA by us, consumer advocacy groups and, in some cases, our larger competitors. We cannot yet fully predict the impact of the CCPA, or subsequent related regulations or guidance, on our business or operations, but it may require us to further modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Decreased availability and increased costs of information could adversely affect our ability to meet our customers’ requirements and could have an adverse effect on our business, results of operations and financial condition.

Additionally, a recent California ballot initiative, the California Privacy Rights Act (the “CPRA”), imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt-outs for certain uses of sensitive data and sharing of personal data starting in January 2023. As voted into law by California residents in November 2020, the CPRA could have an adverse effect on our business, results of operations and financial condition. The effects of the CCPA and CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.

The CCPA has encouraged “copycat” laws and in other states across the country, such as in Nevada, Virginia, New Hampshire, Illinois and Nebraska. Such new privacy laws may add additional complexity, variation in requirements, restrictions, and potential legal risk, require additional investment in resources to compliance programs, and could impact strategies and availability of consumer data and could result in increased compliance costs and/or changes in business practices and policies.

In Europe, the General Data Protection Regulation (“GDPR”) took effect on May 25, 2018 and applies to products and services that we provide in Europe, as well as the processing of personal data of European Union citizens, wherever that processing occurs. The GDPR includes operational requirements for companies that receive or process personal data of residents of the European Union. For example, we have been required to offer new controls to users in Europe before processing data for certain aspects of our service. Failure to comply with GDPR may result in significant penalties for non-compliance of up to the greater of €20 million or 4% of an enterprise’s global annual revenue. In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease/change our processing of our data, enforcement notices and/or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other types of litigations that are similar to class action in the U.S. (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources and reputational harm.

Further, in the European Union, regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive will be replaced by a European Union Regulation, known as the ePrivacy Regulation, which will significantly increase fines for non-compliance and impose burdensome requirements around obtaining user consent. While the text of the ePrivacy Regulation is still under development, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. As regulators start to enforce the strict approach, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our advertising campaigns, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities. Regulators have already started to enforce the strict approach in certain jurisdictions in which we operate, for example in France and in the United Kingdom and it has begun to occur in Germany, where data protection authorities have initiated a probe on third-party cookies. In addition, as part of the European digital strategy, it was announced that the European Commission would upgrade the rules governing digital services in the European Union by proposing two legislative initiatives: the Digital Services Act and the Digital Markets Act. In that context, the European Data Protection Supervisor introduced a proposal in December 2020 to recommend a ban on targeting advertising based on tracking Internet users’ digital activity, as well as restrictions on the categories of data that can be processed for targeting purposes

 

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and the categories of third-party data that may be disclosed to advertisers. The draft proposal includes a push for transparency on the parameters of recommender algorithms. If this proposal or a similar one is passed in the European Union or elsewhere, we may incur substantial costs as we modify our systems to adapt to the new regulatory environment. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services. Any failure to achieve required data protection standards (which are not currently clear when applied to the online advertising ecosystem) may result in lawsuits, regulatory fines or other actions or liability, all of which may harm our results of operations. Because the interpretation and application of privacy and data protection laws such as the CCPA and GDPR, and the related regulations and standards, are uncertain, it is possible that these laws, regulations and standards may be interpreted and applied in manners that are, or are asserted to be, inconsistent with our data management practices or the technological features of our solutions. As such, we could inadvertently fail to comply or be alleged to have failed to comply with such laws, and consequently be subject to significant statutory damages and negative publicity associated with class action litigation and/or costs associated with modifying our solutions and business strategies.

In Brazil, the National Data Protection Authority announced its regulatory strategy for 2021-2023 in early 2021, establishing as its primary objectives the strengthening of data protection culture and establishing an effective data protection regulatory environment, signaling an increased focus on data privacy matters. As additional countries make their data privacy regimes more robust, we may incur substantial costs in order to comply with a variety of regulatory approaches.

In addition to the law and regulations described above, we are also subject to other laws and regulations that dictate whether, how and under what circumstances we can transfer, process and/or receive certain data that is critical to our operations, including data shared between countries or regions in which we operate and data shared among our products and services.

Compliance with these laws and regulations may involve significant costs, consume significant time and resources or require changes in our business practices that result in reduced revenue and profitability. We may also face burdensome and expensive governmental investigations or enforcement actions, regarding our compliance, including being subject to significant fines. Non-compliance could also result in penalties, fines, damages, criminal sanctions against us, our officers or our team members, prohibitions on the conduct of our business, damage to our reputation, restrictions on our ability to process information, allegations by our customers that we have not performed our contractual obligations or other unintended consequences.

In addition, we are required under various laws to obtain and maintain accreditations, permits and/or licenses for the conduct of our business in all jurisdictions in which we have operations and, in some cases, where our customers receive our services. If we do not maintain our accreditations, licenses or other qualifications to provide our services or if we do not adapt to changes in legislation or regulation, we may have to cease operations in the relevant jurisdictions and may not be able to provide services to existing customers or be able to attract new customers. Our failure to comply with applicable legal and regulatory requirements could have a material adverse effect on our reputation, business, financial performance, financial condition and cash flows.

In addition to government regulation, privacy advocacy and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us or our customers or publishers. We are members of self-regulatory bodies that impose additional requirements related to the collection, use and disclosure of consumer data. Under the requirements of these self-regulatory bodies, in addition to other compliance obligations, we are obligated to provide consumers with notice about our use of cookies and other technologies to collect consumer data and of our collection and use of consumer data for certain purposes, and to provide consumers with certain choices relating to the use of consumer data. Some of these self-regulatory bodies have the ability to discipline members or participants, which could result in fines, penalties and/or public

 

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censure (which could in turn cause reputational harm). Additionally, some of these self-regulatory bodies might refer violations of their requirements to the Federal Trade Commission or other regulatory bodies. If we were to be found responsible for such a violation, it could adversely affect our reputation, as well as our business, results of operations and financial condition.

Our operating results may experience significant variability and as a result it may be difficult for us to make accurate financial forecasts and our actual operating results may experience variability, including falling short of our forecasts.

Our growth has not been, and in the future is not expected to be, linear as our period-to-period results have in the past and may in the future fluctuate due to certain factors, including customer demand, a long selling cycle, delays or failures by our customers to provide anticipated business, losses or wins of key customers, variations in team member utilization rates resulting from changes in our customers’ operations, delays or difficulties in expanding our offices and infrastructure, capital investment amounts that may be inappropriate if our financial forecasts are inaccurate, changes to our pricing structure or that of our competitors, currency fluctuations, seasonal changes in the operations of our customers, our ability to recruit team members with the right skillset, failure to meet service delivery requirements as a result of technological disruptions, the timing of acquisitions and other events identified in this prospectus, increased costs to acquire inventory from publishers, all of which may significantly impact our results and the accuracy of our forecasts from period-to-period. For example, the volume of business with some of our customers in the Travel and Hospitality sector is significantly affected by seasonality, and our revenue is typically higher in the fourth quarter due to spending patterns of our customers with calendar fiscal years.

Additionally, for some strategic publishers, we offer a minimum revenue guarantee, typically for a one-year period. Although we have generally been successful in providing advertising demand that generates revenue exceeding the minimum, we have, in some cases, under-delivered the demand and have had to true-up the difference. We have factored this into our financial planning. However, should sudden changes in demand lead to greater true-ups, our business, results of operations and financial condition may be adversely affected.

Seasonal fluctuations in advertising activity could have a material impact on our revenue, cash flow and operating results.

Our revenue, cash flow, operating results and other key operating and performance metrics may vary from quarter to quarter due to the seasonal nature of our customers’ spending on advertising campaigns. For example, customers tend to devote more of their advertising budgets to the fourth calendar quarter to coincide with consumer holiday spending. Moreover, advertising inventory in the fourth calendar quarter may be more expensive due to increased demand for advertising inventory. Political advertising could also cause our revenue to increase during election cycles and decrease during other periods. If our growth rate declines or seasonal spending becomes more pronounced, seasonality could have a material impact on our revenue, cash flow and operating results from period-to-period.

If we are unable to meet publisher quality standards for which advertisements appear on their sites, our relationships with publishers may suffer which could adversely affect our business, results of operations and financial condition.

While we have processes and technologies to ensure consistently high-quality advertising, our failure to ensure the advertising that goes through our platform meets the standards of our publisher partners could lead to contract cancellations or other responses by our publisher partners. On our platform, advertisers can upload their own ads so it is possible that an advertiser could upload content that a publisher deems to be inappropriate for its audience. If our processes and technologies to prevent this were to fail, our relationships with publishers may suffer which could adversely affect our business, results of operations and financial condition.

 

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Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and operating results.

Since Teads S.A. was founded approximately 15 years ago, it has experienced rapid growth and significantly expanded its operations. To manage this growth effectively, we must continually evaluate and evolve our organization. We must also manage our employees, operations, finances, technology and development and capital investments efficiently. Our efficiency, productivity and the quality of our platform and customer service may be adversely impacted if we do not train our new personnel, particularly our engineering, sales and support personnel, quickly and effectively, or if we fail to appropriately coordinate across our organization. We also need to manage cultural differences between our team member populations and that may increase the risk for employment law claims. Additionally, our rapid growth may place a strain on our resources, infrastructure and ability to maintain the quality of our platform. You should not consider our revenue growth and levels of profitability in recent periods as indicative of future performance. In future periods, our revenue or profitability could decline or grow more slowly than we expect. Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and operating results.

Our growth prospects are dependent upon attracting and retaining enough qualified team members to support our operations, as competition for highly skilled personnel is intense, and failure to do so may result in an adverse impact on our business and financial results.

Our business is highly competitive and labor intensive. Our growth prospects, success and ability to meet our customers’ expectations and our growth objectives depends on our ability to recruit and retain team members with the right technical skills and/or language capabilities at competitive cost levels. We need to continuously attract and seek new talent, and there is significant competition for professionals with skills necessary to perform the services we offer to our customers. In addition, in some of the geographies we operate there may be a limited pool of potential professionals with the skills we seek. The increased competition for these professionals increases our costs to recruit and retain team members and presents challenges for us in finding team members. In particular, we depend on attracting and retaining key sales, account management and engineering talent. If we are unable to attract and retain such talent, it may reduce our ability to gain new business and maintain existing customer relationships.

Additionally, our failure to provide innovative benefits to our team members could decrease our competitiveness as an employer and adversely impact our ability to attract and retain a skilled workforce. To attract and retain highly-skilled team members, we have had to offer, and believe we will need to continue to offer, differentiated compensation packages, specific to the geography and skill sets of the team members we are seeking to attract and hire. We have also had to incur costs to provide specialized services and amenities to our team members that impact the profitability of our business. We may need to make significant investments to attract and retain new team members and we may not realize sufficient returns on these investments. An increase in the attrition rate among our team members, particularly among our higher skilled workforce, would increase our recruiting and training costs and decrease our operating efficiency, productivity and profit margins. From time to time, we have also experienced higher levels of voluntary attrition, and, in those periods, we have been required to expend time and resources to recruit and retain talent, restructure parts of our organization and train and integrate new team members. If we are not able to effectively attract and retain team members, we may see a decline in our ability to meet our customers’ demands, which may impact the demand for our services and we may not be able to innovate or execute quickly on our strategy, and our ability to achieve our strategic objectives will be adversely impacted and our business will be harmed.

Additionally, evolving technologies, competition and/or customer demands may entail high costs associated with retaining and retraining existing team members and/or attracting and training team members with new backgrounds and skills. Changing team member demographics, organizational changes, inadequate organizational structure and staffing, inadequate team member communication, changes in the effectiveness of our leadership, a lack of available career and development opportunities, changes in compensation and benefits,

 

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the unavailability of appropriate work processes and tools, customer reductions and operational efficiency initiatives may also negatively affect team member morale and engagement, harm our ability to retain acquired talent from our acquisitions, increase team member turnover, increase the cost of talent acquisition and negatively impact service delivery and the customer experience. If we are unable to attract and retain sufficient numbers of highly-skilled professionals, our ability to effectively lead our current projects and develop new business could be jeopardized, and our business, financial performance, financial condition and cash flows could be materially adversely affected.

Our international operations subject us to additional costs and risks, and may not yield returns, and our continued international expansion may not be successful.

We are an international company operating out of 36 offices in 23 countries around the world with approximately 820 employees as of March 31, 2021. We expect to continue to expand our international operations; further expansion may require significant management attention and financial resources and may place burdens on our management, administrative, operational, legal and financial infrastructure. The costs and risks inherent in conducting business internationally include:

 

   

difficulty and cost associated with maintaining effective controls at foreign locations;

 

   

adapting our platform and solutions to customers’ and publishers’ preferences and customs;

 

   

difficulties in staffing and managing foreign operations;

 

   

difficulties in enforcing our intellectual property rights;

 

   

new and different sources of competition;

 

   

regulatory and other delays and difficulties in setting up foreign operations;

 

   

compliance with anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act and the United Kingdom Anti-Bribery Act 2010, by us, our employees and our business partners;

 

   

compliance with export and import control and economic sanctions, laws and regulations, such as those administered by the U.S. Office of Foreign Assets Control;

 

   

compliance with foreign data privacy laws, such as the European Union ePrivacy Directive and GDPR;

 

   

restrictions on the transfers of funds;

 

   

currency exchange rate fluctuations and foreign exchange controls;

 

   

economic and political instability in some countries;

 

   

health or similar issues, such as a pandemic or epidemic; and

 

   

compliance with the laws of numerous taxing jurisdictions where we conduct business, potential double taxation of our international earnings and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these risks. These factors and others could harm our ability to increase international revenues and, consequently, could adversely affect our business, results of operations and financial condition. The expansion of our existing international operations and entry into additional international markets will require significant management attention and financial resources. Our failure to manage these risks successfully could adversely affect our business, results of operations and financial condition.

 

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We are subject to economic, political and other risks of doing business globally and in emerging markets.

We are a global business with a substantial majority of our assets and operations located outside the U.S. In addition, our business strategies may involve expanding or developing our business in emerging market regions, including EMEA, South America and Asia Pacific. Due to the international nature of our business, we are exposed to various risks of international operations, including:

 

   

adverse trade policies or trade barriers;

 

   

tax policies;

 

   

inflation, hyperinflation and adverse economic effects resulting from governmental attempts to control inflation, such as the imposition of wage and price controls and higher interest rates;

 

   

difficulties in enforcing agreements or judgments and collecting receivables in foreign jurisdictions;

 

   

exchange controls or other currency restrictions and limitations on the movement of funds, such as on the remittance of dividends by subsidiaries;

 

   

inadequate infrastructure and logistics challenges;

 

   

sovereign risk and the risk of government intervention, including through expropriation, or regulation of the economy;

 

   

challenges in maintaining an effective internal control environment with operations in multiple international locations, including language and cultural differences, expertise in international locations and multiple financial information systems;

 

   

concerns relating to the protection and security of our personnel and assets; and

 

   

labor disruptions, civil unrest, significant political instability, wars or other armed conflict.

These risks may impede our strategy by limiting the countries and regions in which we are able to expand. The impacts of these risks may also only materialize after we have begun preparations and made investments to provide services in this new country or region. The exposure to these risks may require us to incur additional costs to mitigate the impact of these risks on our business.

Additionally, international trade and political disputes can adversely affect the operations of multinational corporations like ours by limiting or disrupting trade and business activity between countries or regions. For example, we may be required to limit or halt operations, terminate customer relationships or forego profitable customer opportunities in countries which may in the future be subject to sanctions or other restrictions on business activity by corporations such as ours, by U.S. legislation, executive order or otherwise. Some of our customers may in the future be subject to such sanctions. Additionally, failure to resolve the trade dispute between the countries may also lead to unexpected operating difficulties in certain countries, including enhanced regulatory scrutiny, greater difficulty transferring funds or negative currency impacts.

Fluctuations in foreign currency exchange rates could harm our financial performance.

The functional currency, which is the currency that best reflects the economic environment in which the subsidiaries of Teads S.A. operate and conduct their transactions, is separately determined for each of these subsidiaries and is used to measure their financial position and operating results. As we expand our operations to new countries, our exposure to fluctuations in these currencies may increase and we may incur expenses in other currencies. There may be fluctuations in currency exchange rates between the U.S. dollar and other currencies we transact in which may adversely impact our financial results. In addition, the impact of the COVID-19 pandemic on macroeconomic conditions may impact the proper functioning of financial and capital markets and result in unpredictable fluctuations in foreign currency exchange rates.

 

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Our financial performance could be adversely affected over time by certain movements in exchange rates, particularly if currencies in which we incur expenses appreciate against the USD or if the currencies in which we receive revenues depreciate against the USD.

We are subject to payment-related risks if customers dispute or do not pay their invoices, and any decreases in payments could have a material adverse effect on our business, results of operations, and financial condition. These risks may be heightened as a result of the COVID-19 pandemic and resulting economic downturn.

We generate revenue primarily through revenue payments from our customers for advertising spend. We invoice agencies, DSPs and advertisers and collect the full purchase price for the digital ad impressions they purchase. We pay the publishers based on the pricing agreed through online terms and conditions, classic contracts and minimum guarantee contracts. However, in some cases, we are required to pay publishers for digital ad impressions delivered even if we are unable to collect from the advertiser that purchased the digital ad impressions. In the past, certain advertisers have sought to slow their payments to us or have been forced into filing for bankruptcy protection (mainly in the U.S.), resulting in us not receiving payment. We may experience issues receiving payment going forward from both our DSP customers and performance advertisers, some of which are not as reputable and financially stable as our larger advertising customers and agencies.

Thus far, none of the bankruptcies of our DSP customers have materially impacted us, but if a substantial number of our DSP partners or a large-scale DSP partner were to fail to pay us for our services, our business would be negatively impacted. While our contracts generally do not contain such exposure, there are certain agreements under which we may be responsible for the whole amount of contracted spending, whether or not ultimately paid by the advertiser.

In addition, a prolonged economic downturn may lead additional advertisers to slow or default on payments or in some cases seek bankruptcy protection. We cannot assure you that we will not experience bad debt in the future, and write-offs for bad debt could have an adverse effect on our business, results of operations or financial condition in the periods in which the write-offs occur. If our cash collections are significantly diminished as a result of these dynamics, our revenue and/or cash flow could be adversely affected, and we may need to use working capital to fund our accounts payable pending collection from the advertisers. This may result in additional costs and cause us to forgo or defer other more productive uses of that working capital.

Moreover, we experience requests from publishers and advertisers for discounts, fee concessions or revisions, or other forms of consideration, refunds and greater levels of pricing transparency and specificity, in some cases as a condition to maintain the relationship or to increase the amount of advertising spend that the customer sends to our platform. In addition, we offer discounts or other pricing concessions in order to attract more inventory or demand, or to compete effectively with other providers that have different or lower pricing structures and may be able to undercut our pricing due to greater scale or other factors. Our revenue, the value of our business and our share price could be adversely affected if we cannot maintain and grow our revenue and profitability through volume increases that compensate for any price reductions, or if we are forced to make significant fee concessions or refunds, or if customers reduce spending with us, or publishers reduce inventory available through our platform due to pricing issues.

Our business depends on our ability to successfully obtain payment from our customers for work performed and to bill and collect on what are usually relatively short cycles. We evaluate the financial condition of our customers and maintain allowances against receivables. Macroeconomic conditions, such as any domestic or global credit crisis or disruption of the global financial system, including as a result of the COVID-19 pandemic, could also result in financial difficulties for our customers, up to and including insolvency or bankruptcy, as well as limit their access to the credit markets and, as a result, could cause customers to delay payments to us, request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us. We have had customers in the past who have entered into insolvency proceedings and have defaulted on their obligations to us. Timely collection of customer balances

 

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also depends on our ability to complete our contractual commitments, including delivering on the service level our customers expect, and bill and collect our contracted revenues. If our customer is not satisfied with our services or we are otherwise unable to meet our contractual requirements, we might experience delays in collection of and/or be unable to collect our customer balances, and if this occurs, our financial performance, financial condition and cash flows could be adversely affected. In addition, if we experience an increase in the time to bill and collect for our services, our cash flows could be adversely affected.

We may incur liabilities for which we are not insured, and may suffer reputational damage in connection with certain claims against us.

We could be sued directly for claims that could be significant, such as claims related to breaches of privacy or network security, infringement of intellectual property rights, violation of wage and hour laws, or systemic discrimination, and our contracts may not fully limit or insulate us from those liabilities. Additionally, in our contracts with our customers, we indemnify our customers for losses they may incur for our failure to deliver services pursuant to the terms of service set forth in such service contracts, and a limited number of our service contracts provide for high or unlimited liability for the benefit of our customers related to damages resulting from breaches of privacy or data security in connection with the provision of our services. Although we have various insurance coverage plans in place, including coverage for general liability, errors or omissions, property damage or loss and information security and privacy liability, that coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more claims. The policies may also have exclusions which would limit our ability to recover under them, the limits under the policy may be insufficient, or our insurers may deny coverage following their investigation of a claim. The successful assertion of one or more large claims against us that are excluded from our insurance coverage or exceed available insurance coverage, or changes in our insurance policies (including premium increases, the imposition of large deductible or co-insurance requirements, changes in terms and conditions or outright cancellation or non-renewal of coverage), could have a material adverse effect on our business, financial performance, financial condition and cash flows. Furthermore, the assertion of such claims, whether or not successful, could cause us to incur reputational damage, which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Our team members, contractors, consultants or other associated parties may behave in contravention of our internal policies or laws and regulations applicable to us, or otherwise act unethically or illegally, which could harm our reputation or subject us to liability.

We have implemented and expect to implement a number of internal policies, including a code of ethics and conduct and policies related to security, privacy, respectful behavior in the workplace, anti-bribery and anti-corruption, security, localized labor and employment regulations, health and safety and securities trading in order to promote and enforce ethical conduct and compliance with laws and regulations applicable to us. Compliance with these policies requires awareness and understanding of the policies and any changes therein by the parties to whom they apply. We may fail to effectively or timely communicate internal policies or changes therein to our team members, contractors, consultants or other associates, and such persons may otherwise fail to follow our policies for reasons beyond our control. We are exposed to the risk that our team members, independent contractors, consultants or other associates may engage in activity that is unethical, illegal or otherwise contravenes our internal policies or the laws and regulations applicable to us, whether intentionally, recklessly or negligently. It may not always be possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including harm to our reputation and the imposition of significant fines or other sanctions, all of which could have a material adverse effect on our customer relationships, business, financial condition and financial performance.

 

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We may be subject to litigation and other disputes, which could result in significant liabilities and adversely impact our financial results.

From time to time, we are subject to lawsuits, arbitration proceedings, and other claims brought or threatened against us in the ordinary course of business. These actions and proceedings may involve claims for, among other things, compensation for personal injury, workers’ compensation, employment discrimination and other employment-related damages, damages related to breaches of privacy or data security, breach of contract, property damage, liquidated damages, consequential damages, punitive damages and civil penalties or other losses, or injunctive or declaratory relief. In addition, we may also be subject to class action lawsuits, including those alleging violations of the Fair Labor Standards Act in the U.S. and its international equivalents, state and municipal wage and hour laws, and misclassification of independent contractors.

Due to the inherent uncertainties of litigation and other dispute resolution proceedings, we cannot accurately predict their ultimate outcome. The outcome of litigation, particularly class action lawsuits, is difficult to assess or quantify. Class action lawsuits may seek recovery of very large or indeterminate amounts. Accordingly, the magnitude of the potential loss may remain unknown for substantial periods of time. These proceedings could result in substantial cost and may require us to devote substantial resources to defend ourselves. The ultimate resolution of any litigation or proceeding through settlement, mediation or a judgment could have a material impact on our reputation and adversely affect our financial performance and financial position.

Our platform could be susceptible to errors, defects or unintended performance problems that could adversely affect our business, results of operations and financial condition.

We depend upon the sustained and uninterrupted performance of our platform to operate our business. Software bugs, faulty algorithms, technical or infrastructure problems or system updates could lead to an inability to process data to place advertisements or price inventory effectively, or cause advertisements to display improperly or be placed in proximity to inappropriate content, which could adversely affect our business, results of operations and financial condition. These risks are compounded by the complexity of our technology and the large amounts of data we utilize. Because our platform is complex, undetected material defects, errors and failures may occur. Despite testing, errors or bugs in our platform may not be found until it is in our live operating environment. For example, changes to our solution have in the past caused errors in the measurements of transactions conducted through our platform, resulting in disputes raised by customers. Errors or failures in our solution, even if caused by the implementation of changes by publishers or partners to their systems, could also result in negative publicity, damage to our reputation, loss of or delay in market acceptance of our solution, increased costs or loss of revenue or loss of competitive position. In such an event, we may be required or choose to expend additional resources in an attempt to mitigate any problems resulting from defects, errors and failures in our platform. As a result, defects or errors in our products or services could harm our reputation, result in significant costs to us, impair the ability of publishers to sell and for advertisers to purchase inventory and impair our ability to fulfill obligations with publishers and partners. Any significant interruptions could adversely affect our business, results of operations and financial condition.

While we believe our team members undergo appropriate training, if any person, including any of our team members, negligently disregards or intentionally breaches controls or procedures with which we are responsible for complying with respect to such data or otherwise mismanages or misappropriates that data, or if unauthorized access to or disclosure of data in our possession or control occurs, we could be subject to significant liability to our customers or our customers’ clients for breaching contractual confidentiality and security provisions or for permitting access to personal information subject to privacy laws, as well as liability and penalties in connection with any violation of applicable privacy laws or criminal prosecution. Unauthorized disclosure of sensitive or confidential customer or team member data, whether through breach of computer systems, systems failure, team member negligence, fraud or misappropriation, or otherwise, could damage our reputation and cause us to lose customers and result in liability to individuals whose information was compromised. Similarly, unauthorized access to or through our information systems and networks or those we develop or manage for our customers and publisher partners, whether by our team members or third parties,

 

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could result in negative publicity, damage to our reputation, loss of customers or business, class action or other litigation, costly regulatory investigations and other potential liability.

Additionally, remote-working solutions deployed during the COVID-19 pandemic could result in heightened confidentiality and security risks on account of services being delivered in a physically unsupervised environment and via computer systems and networks outside of our control and management and could create additional opportunities for cybercriminals to exploit vulnerabilities. If any person, including any of our team members, intentionally or inadvertently penetrates our perimeter or internal network security, computing infrastructure or otherwise mismanages or misappropriates sensitive data, or discloses or distributes any such data in an unauthorized manner, we could be subject to significant liability and class action or other lawsuits from our customers or their clients for breaching contractual confidentiality provisions or privacy laws, or investigations and penalties from regulators. Under some of our customer contracts, we have from time-to-time agreed to pay for the costs of remediation or notice to end users or credit monitoring, as well as other costs.

In addition, certain third parties to whom we outsource certain of our services or functions, or with whom we interface, store our information assets or our customers’ confidential information, as well as those third parties’ providers, are also subject to the risks outlined above. Although we generally require our vendors to hold sufficient liability insurance and provide indemnification for any liability resulting from the vendor’s breach of the services agreement, a breach or attack affecting these third parties, any delays in our awareness of the occurrence of such breach or attack, and our or third parties’ inability to promptly remedy such a breach or attack, could also harm our reputation, business, financial performance, financial condition and cash flows, and could subject us to liability for damages to our customers and their clients. Failure to select third parties that have robust cybersecurity and privacy capabilities may also jeopardize our ability to attract new customers, who may factor their assessment of risks associated with such third parties in their decision.

Cyber-attacks penetrating the network security of our data centers or any unauthorized disclosure or access to confidential information and data of our customers or their end clients could also have a negative impact on our reputation and customer confidence, which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

If we fail to detect or prevent fraud on our platform, or malware intrusions into the systems or devices of our publisher partners and their consumers, advertisers and publishers could lose confidence in our platform, and we could face legal claims that could adversely affect our business, results of operations and financial condition.

We may be subject to fraudulent or malicious activities undertaken by persons seeking to use our platform for improper purposes. For example, someone may attempt to divert or artificially inflate advertiser purchases through our platform, or to disrupt or divert the operation of the systems, and devices of our publisher partners, and their consumers in order to misappropriate information, generate fraudulent billings or stage cyberattacks, or for other illicit purposes. For example, sophisticated bot-nets and other complex forms of click fraud might be used to generate fraudulent impressions and divert advertising revenue from legitimate websites of publishers. Those activities could also introduce malware through our platform in order to commandeer or gain access to information on consumers’ computers. We use third-party tools and proprietary machine learning algorithms to identify non-human traffic and malware, and we may reduce or terminate relationships with publishers that we find to be engaging in such activities. Although we continuously assess the quality and performance of advertising on publishers’ digital media properties, and rely on our own and third-party tools, as well as the controls of publishers, it may nevertheless be difficult to detect fraudulent or malicious activity. As such, our platforms and systems may be vulnerable to, and from time to time, experience, unauthorized access, damage or other interruptions. Further, perpetrators of fraudulent impressions and malware frequently change their tactics and may become more sophisticated over time, requiring both us and third parties to continually improve processes for assessing the quality of publisher inventory and controlling fraudulent activity. If we fail to detect or prevent fraudulent or malicious activity of this sort, our reputation could be damaged, advertisers may contest payment, demand refunds, or fail to give us future business, or we could face legal claims from

 

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advertisers. Even if we are not directly involved in fraud or malicious activity, any sustained failures of others in our industry to adequately detect and prevent fraud could generate the perception that programmatic trading is unsafe and lead our publisher partners to avoid programmatic advertising.

We depend on third-party data centers, the disruption of which could adversely affect our business, results of operations and financial condition.

We host our infrastructure at third-party data centers. Any damage to or failure of our systems generally would adversely affect our ability to properly allocate resources and timely deliver our products or services which may prevent us from operating our business. We rely on the Internet and, accordingly, depend upon the continuous, reliable, and secure operation of Internet servers, related hardware and software and network infrastructure. While we control and have access to our servers and all of the components of our network that are located in our external data centers, we do not control the operation of these facilities. The owners of our data center facilities, with whom we may experience problems, have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, or if one of our data center operators is acquired, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and possible service interruption in connection with doing so. Problems faced by our third-party data center operations, with the telecommunications network providers with whom we or they contract, or with the systems by which our telecommunications providers allocate capacity among their customers, including us, could adversely affect the experience of publishers. Additionally, improving our platform’s infrastructure and expanding its capacity in anticipation of growth in new channels and formats, as well as implementing technological enhancements to our platform to improve its efficiency and cost-effectiveness are key components of our business strategy, and if our data centers are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business. Any changes in third-party service levels at our data centers or any errors, defects, disruptions or other performance problems could adversely affect our reputation, expose us to liability, cause us to lose customers or otherwise adversely affect our business, results of operations and financial condition. Service interruptions might reduce our revenue, trigger refunds to publishers, harm our reputation, subject us to potential liability or adversely affect our business, results of operations and financial condition.

The ongoing effects of the COVID-19 pandemic, or the occurrence of a natural disaster, an act of terrorism, power outage, vandalism or sabotage, cyberattack or other unanticipated problems at these facilities could result in interruptions in the availability of our platform. While we have disaster recovery arrangements in place, they have not been tested under actual disasters or similar events and may not effectively permit us to continue to provide our products and services in the event of any problems with respect to our data centers. If any of these events were to occur to our business, our business, results of operations or financial condition could be adversely affected.

Platform outages or disruptions, including any interruptions due to cyberattacks or to our failure to maintain adequate security and supporting infrastructure as we scale, could damage our reputation and our business, results of operations and financial condition.

As we grow our business, we expect to continue to invest in our platform infrastructure, including hardware and software solutions, network services and database technologies, as well as potentially increase our reliance on open source software. Without these improvements, our operations might suffer from unanticipated system disruptions, slow transaction processing, unreliable service levels, impaired quality or delays in reporting accurate information regarding transactions in our platform, any of which could negatively affect our reputation and ability to attract and retain customers and publishers. The steps we take to enhance the reliability, integrity and security of our platform as it scales are expensive and complex, and poor execution could result in operational failures. In addition, maintaining the security and availability of our platform, network and internal IT systems and the security of information we hold on behalf of our customers is a critical issue for us and our customers. Attacks on our customers and our own network are frequent and take a variety of forms, including distributed denial-of-service attacks, infrastructure attacks, botnets, malicious file attacks, cross-site scripting, credential abuse, ransomware, bugs, viruses, worms and malicious software programs. Cyberattack techniques

 

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such as phishing, ransomware and social engineering are constantly evolving and becoming increasingly diverse, growing increasingly more sophisticated and could involve denial-of-service attacks or other maneuvers that have the effect of disrupting the availability of services on our platform, such that cyberattacks on our platform may remain undetected for an extended period of time, which could seriously harm our reputation and business. Other types of cyberattacks could harm us even if our platform operations are left undisturbed. For example, attacks may be designed to deceive employees into releasing control of their systems to a hacker, while others may aim to introduce computer viruses or malware into our systems with a view to stealing confidential or proprietary data. We have historically been the target of phishing attempts, including fraudulent acts by individuals usurping our identity, and we may be the target of such attempts in the future. We are also vulnerable to unintentional errors or malicious actions by persons with authorized access to our systems that exceed the scope of their access rights, distribute data erroneously or, unintentionally or intentionally, interfere with the intended operations of our platform. Incidents like this can give rise to a variety of losses and costs, including legal exposure, and regulatory fines, damages to brand reputation, amongst others. Although we maintain insurance coverage, it may be insufficient to protect us against all losses and costs stemming from security breaches, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events. Outages and disruptions of our platform, including any caused by cyberattacks, may harm our reputation and our business, results of operations and financial condition.

We must scale our platform infrastructure to support anticipated growth and transaction volume. If we fail to do so, we may limit our ability to process ad impressions, and we may lose revenue.

Our business depends on processing ad impressions in milliseconds, and we must handle an increasingly large volume of such transactions. The addition of potential new solutions, such as header bidding in mobile and the CTV and over-the-top formats; the need to support evolving advertising formats; our handling, and use, of increasing amounts of data; and overall growth in impressions place growing demands upon our platform infrastructure. If we are unable to grow our platform to support substantial increases in the number of transactions and in the amount of data we process, on a high-performance, cost-effective basis, our business, results of operations and financial condition could be adversely affected. We expect to continue to invest in our platform in order to meet these requirements, and that investment may adversely affect our business, results of operations and financial condition.

We may be unable to successfully identify, complete, integrate and realize the benefits of acquisitions or manage the associated risks, all of which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

We may seek opportunities to expand the scope of our existing services, add new customers or enter new geographic markets through acquisitions. To the extent we pursue growth through acquisitions, there can be no assurance that we will successfully identify suitable candidates or that we will effect strategic transactions at attractive prices, have sufficient capital resources to finance any potential acquisitions or be able to consummate any desired transactions. Our failure to complete potential acquisitions in which we have invested or may invest significant time and resources could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Acquisitions, including completed acquisitions, involve a number of risks, including diversion of management’s attention from operating our business, developing our relationships with key customers and seeking new revenue opportunities, failure to retain key personnel of acquired companies, legal risks and liabilities relating to the acquisition or the acquired entity’s historic operations which may be unknown or undisclosed and for which we may not be indemnified fully or at all, failure to integrate the acquisition in a timely manner, and, in the case of our potential acquisitions, our ability to finance the acquisitions on attractive terms or at all, any of which could have a material adverse effect on our business, financial performance, financial condition and cash flows. Future acquisitions may also result in the incurrence of indebtedness or the issuance of additional equity securities.

 

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If we fail to maintain a consistently high level of service experience and implement and communicate high-quality corporate sustainability and social purpose activities, our ability to attract new, and retain existing customers and team members could be adversely affected.

Our customers’ loyalty and their likelihood to expand the services that they use with us and to recommend us is dependent upon our ability to provide a service experience that meets or exceeds their expectations and that is differentiated from our competitors. We believe our focus on customer experience is critical to attracting new customers and retaining and growing our business with our existing customers. If we are unable to maintain a consistently high level of service, our customers could change service providers, our revenues and profitability could be negatively impacted and our reputation could suffer.

In addition, we believe the corporate sustainability and social purpose activities in which we are involved also assist us in attracting and retaining customers and team members. The corporate sustainability and social purpose activities that we are involved in are important to the Company and are a part of our culture and we believe it is a differentiating factor for customers in choosing to work with us. More and more companies, including many of our customers, are demanding that their service providers embody corporate sustainability and social purpose goals that reflect their own brand image and are consistent with the ones their customers and other stakeholders have adopted and are declining to work with providers who do not reflect these values. If we are unable to meet or exceed the evolving expectations of our customers in these areas or implement high-quality corporate sustainability and social purpose activities on a timely basis, and effectively communicate them to our customers, our reputation may suffer, which may negatively impact our ability to attract new and retain existing customers. Our corporate sustainability and social purpose activities are also important to recruiting and retaining our team members, and our failure to meet or exceed the evolving expectations of our team members in these areas could have adverse impacts on our ability to attract and retain talent upon which our service offerings depend. As a result, we have in the past invested significant resources in developing and maintaining our corporate sustainability and social purpose activities, and the required levels of such investments may increase in the future as such activities become increasingly important to our customers and team members, which would increase our costs and may adversely affect our financial performance and cash flows.

Although we strive to implement a customer-first culture, any failure to maintain a consistently high level of customer service, or a market perception that we do not maintain high-quality customer service, or a failure to communicate effectively or meet our customers’ and team members’ expectations about our corporate sustainability and social purposes initiatives, could adversely affect our ability to attract new customers and retain existing customers, and increase attrition and other costs associated with retaining talent, all of which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Our business and financial results have been and will continue to be adversely affected by the COVID-19 pandemic and could be adversely affected by another global pandemic or economic and geopolitical conditions, which could negatively affect our customers’ and partners’ businesses and levels of business activity, demand for our services as well as our and our customers’ and partners’ liquidity and access to capital.

The COVID-19 pandemic has spread to nearly all countries around the world, including each of the countries where our offices are located, and has created significant uncertainty and disruption. Governmental measures and regulations, such as city or country-wide lockdowns, local, domestic and international travel restrictions as well as closures of the enabling infrastructure necessary for our business to operate smoothly, have resulted, and may in the future result, in restrictions on our ability to fully deliver services to our customers. Such measures present concerns that may dramatically affect our ability to conduct our business effectively, including, but not limited to, adverse effects on our team members’ health and a slowdown and often a stoppage of delivery, work, travel and other activities which are critical for maintaining on-going business activities. The effects of the pandemic have caused our customers to defer decision making, delay planned work, reduce volumes or seek to terminate current agreements with us. As a result of the COVID-19 pandemic, we have had to temporarily close a

 

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number of our sites in accordance with government ordinances applicable in the various jurisdictions in which we operate. Closures of sites for such extended periods of time may impact our ability to retain and attract talent, which may have negative impacts on our human resources costs and our profitability.

The increase in remote working may also result in customer privacy, IT security and fraud concerns as well as increase our exposure to potential wage and hour issues. An at-home workforce introduces increased risks to satisfying our contractual obligations and maintaining the security and privacy of the data we process. Further, although we have not experienced significant issues with our managerial and financial reporting to date as a result of a restriction on travel or otherwise, in the future, we may suffer delays in managerial and financial reporting, be unable to perform audits and apply effective internal controls over financial reporting or fail to abide by other regulatory or compliance requirements to which we are subject as a result of the effects of the COVID-19 pandemic.

Given the uncertainty around the severity and duration of the impact of the COVID-19 pandemic on our customers’ and publishers’ businesses and the countries and communities in which we operate, including the possible resurgence of infection rates, spread to communities previously not significantly affected and the changes in the mitigation and protective measures used to combat the COVID-19 pandemic, we cannot reasonably estimate its impact on our future business, financial performance, financial condition and cash flows. To the extent the COVID-19 pandemic adversely affects our business, financial condition, financial performance and cash flows, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

In addition to the impact directly on our business, the COVID-19 pandemic has caused, and is likely to continue to cause, additional slowdown in the global economy, as is evidenced by the recent declines in investments, exports and industrial production. The global spread of the COVID-19 pandemic has created, and is likely to continue to create, significant volatility, uncertainty and economic disruption. In addition, volatility in the domestic politics of major markets may lead to changes in the institutional framework of the international economy which presents a particular risk for a business as international as ours.

Changes in the general level of economic activity, such as decreases in business and consumer spending, could result in a decrease in demand for the products and services that our customers provide to their clients, and consequently reduce our customers’ demand for our services, which would reduce our revenue. Economic and political uncertainty could undermine business confidence and cause potential new customers to delay engaging us and our existing customers to reduce or defer their spending on our services or reduce or eliminate spending under existing contracts with us. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets. For example, following the withdrawal of the United Kingdom from the European Union, commonly known as “Brexit”, on January 31, 2020, the United Kingdom entered into a transition period which terminated on December 31, 2020, before which on December 24, 2020, the United Kingdom and the European Union agreed to a trade deal (the “Trade and Cooperation Agreement”) which was ratified by the United Kingdom on December 30, 2020. The Trade and Cooperation Agreement is subject to formal approval by the European Parliament and the Council of the European Union before it comes into effect and has been applied provisionally since January 1, 2021. It is difficult to predict the effect of Brexit on the European and global economy, and hence there is significant political and economic uncertainty regarding the future trading relationship between the United Kingdom and the European Union. These and other economic and geopolitical conditions may affect our business in a number of ways, as we have operations in 23 countries and we service customers across multiple geographic regions. If any of these conditions affect the countries in which our customers are located or conduct their business, we may experience reduced demand for and pricing pressure on our services, which could lead to a reduction in business volumes and could adversely affect financial performance.

 

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Our customer contracts, which can be canceled at any time, do not usually include any commitments to spend any amount of money with us, subjecting us to sudden changes in spend estimates which could have an adverse effect on our business, financial performance, financial condition and cash flows.

Our customers generally provide estimates of how much they will spend on advertising with us, but they do not usually commit contractually to a specific spend amount, which is typical practice in the digital advertising industry. Though we believe that we have a strong revenue forecasting system, there are times when sudden terminations or unforeseen reductions in spend occur due to reasons beyond our control, including sudden changes in a customer’s campaign needs or financial situation unrelated to our relationship with the customer. For example, certain of our customers have experienced adverse pressures on their businesses as a result of the COVID-19 pandemic, which has affected the revenue we receive from these engagements and the predictability of advertising revenues during this uncertain period. If we are unable to effectively forecast revenue, we may not be able to make the best decisions with respect to investment and management, which could have a material adverse effect on our business, financial condition, financial performance and cash flows.

In preparing our financial statements, we make certain assumptions, judgments and estimates that affect amounts reported in our consolidated financial statements, which, if not accurate, may significantly impact our financial results.

In preparing our financial statements, we make certain assumptions, judgments and estimates that affect amounts reported in our consolidated financial statements, which, if not accurate, may significantly impact our financial results. We make assumptions, judgments and estimates for a number of items, including those listed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.” These assumptions, judgments and estimates are drawn from historical experience and various other factors that we believe are reasonable under the circumstances as at the date of the consolidated financial statements. Actual results could differ materially from our estimates, and such differences could significantly impact our financial results.

We have no history of operating as a separate, publicly-traded company, and may not have access to the same resources and advantages that we would have if we did not become a public company, such that our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly-traded company and may not be a reliable indicator of our future results.

Following our initial public offering, there is a risk that, by becoming an independent public company, we may incur higher costs for certain functions and overhead as we establish some independent corporate functions and become more susceptible to market fluctuations and other adverse events than we would have been if we did not become a public company. Additionally, we have been able to leverage the historical market reputation and performance of the Altice group to recruit and retain key personnel to run our business. As a publicly-traded company, we will not have the same historical market reputation and it may be more difficult for us to recruit or retain such key personnel. Other changes may occur in our cost structure, management, financing and business operations as a result of operating as a public company and these changes could be material to us. As a result, our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly-traded company and may not be a reliable indicator of our future results.

Our business could be materially and adversely affected if we do not protect our intellectual property or if our services are found to infringe on the intellectual property of others.

Our success depends in part on certain methodologies, practices, tools and technical expertise we utilize in providing our services. We engage in designing, developing, implementing and maintaining applications and other proprietary materials. In order to protect our rights in these various materials, we may seek protection under trade secret, patent, copyright and trademark laws. We also generally enter into confidentiality and nondisclosure agreements with our customers and potential customers, and third-party vendors, and seek to

 

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limit access to and distribution of our proprietary information. For our team members and independent contractors, we require confidentiality and proprietary information agreements. These measures may not prevent misappropriation or infringement of our intellectual property or proprietary information and a resulting loss of competitive advantage, and legal and contractual remedies available to us may not adequately compensate us. Additionally, although we have some registered trademarks, such registrations are subject to complex rules and regulations and can be challenged by third parties. As such, we may not be successful in maintaining our registered trademarks or obtaining trademark registration for those for which we have applied or may in the future apply. Further, even in the event we are successful in maintaining or obtaining such trademarks, such registrations may not be effective in preventing infringement or misappropriation by third parties.

We may be unable to protect our intellectual property and proprietary machine learning algorithms or brand effectively, which may allow competitors to duplicate our technology and products and may adversely affect our ability to compete with them. At the same time, our competitors may independently develop technology or services that are equivalent to or superior to ours. Given our international operations, the laws, rules, regulations and treaties in effect in the jurisdictions in which we operate and the contractual and other protective measures we take, may not be adequate to protect us from misappropriation or unauthorized use of our intellectual property, or from the risk that such laws could change. To the extent that we do not protect our intellectual property effectively, other parties, including former team members, with knowledge of our intellectual property may leave and seek to exploit our intellectual property for their own or others’ advantage. We may not be able to detect unauthorized use and take appropriate steps to enforce our rights, and any such steps may not be successful. Infringement by others of our intellectual property, including the costs of enforcing our intellectual property rights, may have a material adverse effect on our business, financial performance, financial condition and cash flows.

In addition, we cannot be certain that our products and services do not and will not infringe or misappropriate the intellectual property rights of others. We have in the past been, and may in the future be, subject to legal disputes and claims in the ordinary course of our business, including claims that our systems, processes, marketing, data usage or technologies infringe on the intellectual property rights of third parties. Non-practicing entities may also bring baseless, but nonetheless costly to defend, infringement claims. We could be required to indemnify our customers if they are sued by a third party for intellectual property infringement arising from materials that we have provided to the customers in connection with our services and deliverables. We may not be successful in defending against such intellectual property claims, in which case we could lose valuable property rights, or in obtaining licenses or an agreement to resolve any intellectual property disputes. Furthermore, intellectual property laws may change over time, and such changes may impair our ability to maintain, protect or enforce our intellectual property rights. Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, we cannot provide assurances that a future assertion of an infringement claim against us or our customers will not cause us to alter our business practices, lose significant revenues, incur significant license, royalty or technology development expenses or pay significant monetary damages or legal fees and costs. Any such claim for intellectual property infringement may have a material adverse effect on our business, financial performance, financial condition and cash flows. In addition, we may be required to license technology from third parties to develop and market our products and services, which may not be available on commercially reasonable terms, or at all, and could adversely affect our ability to compete.

If publishers or customers do not have sufficient rights to the content, technology, data or other material that they provide or make available to us, our business and reputation may be harmed.

If publishers or customers do not have sufficient rights to the content, technology, data or other material associated with an ad impression that they provide, or if it infringes or is alleged to infringe the intellectual property rights of third parties, we could be subject to claims from those third parties, which could adversely affect our business, results of operations, and financial condition. For example, channel partners may aggregate ad impressions across several publishers, and we may not be able to verify that these aggregators own or have rights to all of their digital ad impressions. As a result, we may face potential liability for copyright,

 

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patent, trademark or other intellectual property infringement, or other claims. Litigation to defend these claims, whether or not meritorious, could be costly and have an adverse effect on our business, results of operations and financial condition. We cannot assure you that we are adequately insured to cover claims of these types or adequately indemnified for all liability that may be imposed on us as a result of these claims.

Terrorist attacks and other acts of violence, including those involving any of the countries in which we or our customers or publishers have operations, could lead to or exacerbate an economic recession and pose significant risks to our team members and facilities.

Terrorist attacks and other acts of violence or war may adversely affect worldwide financial markets and could potentially lead to, or exacerbate, an economic recession, which could adversely affect our business, financial performance, financial condition and cash flows. These events could adversely affect our customers’ or publishers’ levels of business activity and precipitate sudden significant changes in regional and global economic conditions and cycles. These events also pose significant risks to our team members and to our offices and operations around the world. We generally do not have insurance for losses and interruptions caused by terrorist attacks, military conflicts and wars. Any such event could have a material adverse effect on our business, financial performance, financial condition and cash flows.

We may need to raise additional funds to pursue our growth strategy or continue our operations, and we may be unable to raise capital when needed or on acceptable terms, which could lead us to be unable to expand our business.

From time to time, we may seek additional financing to fund our growth, enhance our technology, respond to competitive pressures or make acquisitions or other investments, such as investing in a CTV platform. We cannot predict the timing or amount of any such capital requirements at this time. General economic, financial or political conditions in our markets may deteriorate or other circumstances may arise, which, in each case, may have a material adverse effect on our cash flows and our business, leading us to seek additional capital. We may be unable to obtain financing on satisfactory terms, or at all. In this case, we may be unable to expand our business at the rate desired or at all and our financial performance may suffer. Financing through issuances of equity securities would be dilutive to holders of our Class A Shares.

After the offering, certain of our executive officers and directors may have actual or potential conflicts of interest.

Certain of our executive officers and directors may have relationships with third parties that could create, or appear to create, potential conflicts of interest. Our executive officers and directors who are executive officers and directors of our significant shareholders could have, or could appear to have, conflicts of interest, such as where our significant shareholders are required to make decisions that could have implications for both them and us. See “Management.”

If we cannot maintain our culture as we grow, our services, financial performance and business may be harmed.

We believe that our unique entrepreneurial culture, our dedication to serving our customers and our publisher partners at the highest level and our dedication to building and maintaining a fun, fair and inspiring workplace has led to our ability to attract and retain a highly-skilled, engaged and motivated workforce. We believe that this has driven our strong customer retention and the higher satisfaction scores we receive from our customers, which has, in part, been responsible for our growth and differentiation in the marketplace. As we evolve our products and services, grow into new geographies, open new delivery locations, increase the number of team members and acquire new companies, it may become more difficult for us to maintain the culture that supports our success. If our unique culture is not maintained, our ability to attract and retain highly skilled team members and customers may be adversely impacted, and our operational and financial results may be negatively affected.

 

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Risks Related to Certain Tax Matters

Changes in tax laws or administrative policies related to tax, in particular as it relates to taxation of digital services, could materially affect our financial position and results of operations.

Changes in tax laws or administrative policies related to tax in the jurisdictions where we operate may increase our worldwide effective tax rate, create tax and compliance obligations in jurisdictions in which we previously had none and adversely affect our financial position and cash flows. In addition, our ability to repatriate surplus earnings from our operating subsidiaries in a tax-efficient manner is dependent upon interpretations of local laws, bilateral tax treaties and European Union law, as well as possible changes in local laws and European Union law and the renegotiation of existing bilateral tax treaties. Changes to any of these may adversely affect our overall tax rate, or the cost of our services to our customers, which could have a material adverse effect on our business, financial performance, financial condition and cash flows.

Among the recent and possible future changes to tax laws that may affect our business are those relating to the taxation of digital services. In March 2018, the European Commission released a proposal for a European Council directive on taxation of specified digital services. The proposal calls for an interim tax on certain revenues from digital activities, as well as a longer-term regime that creates a taxable presence for digital services and imposes a tax on digital profits. Some jurisdictions have enacted a tax on technology companies that generate revenues from the provision of digital services, including the United Kingdom, France, Spain and Italy, and a number of other jurisdictions are considering enacting similar digital tax regimes. In addition, the Organisation for Economic Co-operation and Development, as part of its Base Erosion and Profit Shifting (“BEPS”) Action Plan, recently released proposals that provide a long-term, multilateral framework on taxation of the digital economy. Although we do not know the exact impact, future developments related to some or all of these proposals could have an adverse impact on our effective tax rate and/or affect our business by increasing our future tax obligations.

U.S. persons that are treated as owning at least 10% of our shares may not be furnished with sufficient information to comply with their U.S. income tax reporting obligations.

As a result of the comprehensive U.S. tax reform bill signed into law on December 22, 2017, we expect the Company and its non-U.S. subsidiaries will be classified as “controlled foreign corporations” for U.S. federal income tax purposes due to the expanded application of certain ownership attribution rules within a multinational corporate group. If a U.S. person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our shares, such person may be treated as a “United States shareholder” with respect to the Company and one or more of our controlled foreign corporation subsidiaries. A United States shareholder of a controlled foreign corporation generally will be required to annually report and include in its U.S. taxable income, as ordinary income, its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not we make any distributions to such United States shareholder. An individual United States shareholder generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a corporate United States shareholder with respect to a controlled foreign corporation. A failure by a United States shareholder to comply with its reporting obligations may subject the United States shareholder to significant monetary penalties, loss of foreign tax credits and may extend the statute of limitations with respect to the United States shareholder’s U.S. federal income tax return for the year for which such reporting was due. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are controlled foreign corporations for any given year or whether any investor is a United States shareholder with respect to any such controlled foreign corporations. We also cannot guarantee that we will furnish to United States shareholders information that may be necessary to comply with the aforementioned reporting obligations. U.S. investors should consult their tax advisors regarding the potential application of these rules to their investment in our shares. The risk of being subject to increased taxation may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our Class A Shares.

 

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We may be treated as a passive foreign investment company, which could result in material adverse tax consequences for investors in the Class A Shares subject to U.S. federal income tax.

We will be classified as a passive foreign investment company (a “PFIC”) for any taxable year if either: (1) at least 75% of our gross income is “passive income” for purposes of the PFIC rules, or (2) at least 50% of the value of our assets, determined on the basis of a quarterly average, is attributable to assets that produce or are held for the production of passive income. Based on our income, assets and business activities, we expect that we will not be classified as a PFIC for U.S. federal income tax purposes for our current taxable year or in the near future. The determination of PFIC status is made annually at the end of each taxable year and is dependent upon a number of factors, some of which are beyond our control, including the relative values of our assets and subsidiaries, and the amount and type of our income. As a result, there can be no assurance that we will not be a PFIC in 2021 or any subsequent year or that the IRS will agree with our conclusion regarding PFIC status and would not successfully challenge our position. If we are treated as a PFIC for any taxable year during which a U.S. Holder (as defined in “Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations to U.S. Holders”) holds the Class A Shares, the U.S. Holder may be subject to material adverse tax consequences upon a sale or other disposition of the Class A Shares, or upon the receipt of distributions in respect of the Class A Shares. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are a PFIC for any taxable year. U.S. Holders should consult their tax advisors about the potential application of the PFIC rules to their investment in the Class A Shares. For further discussion, see “Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations to U.S. Holders.”

Dividends distributed by the Company on the Class A Shares to certain related parties in low-tax jurisdictions might in the future become subject to an alternative Dutch withholding tax on dividends.

Under current law, dividends paid on our Class A Shares are in principle subject to Dutch dividend withholding tax at a rate of 15% under the 1965 Dividend Withholding Tax Act, unless a domestic or treaty exemption applies. On March 25, 2021, the Dutch State Secretary of Finance submitted a bill to the Dutch parliament pursuant to which a new ‘anti tax haven’ dividend withholding tax would be imposed on dividends paid to related entities in low-taxed jurisdictions, effective January 1, 2024. An entity is related if (i) it holds, directly or indirectly a qualifying interest in us or (ii) an entity in which a third party holds a direct or indirect qualifying interest that also holds a qualifying interest in us. An entity is also considered related to us if this entity is part of a collaborating group (samenwerkende groep) of entities that jointly directly or indirectly holds a qualifying interest in us. The term ‘qualifying interest’ means a directly or indirectly held interest that enables such entity or such collaborating group to exercise a definite influence over another entities’ decisions, such as us, and allows it to determine the other entities’ activities. The tax haven withholding tax will be imposed at the highest corporate income tax rate in effect at the time of the distribution (currently 25%). The tax haven withholding tax liability will be reduced with any dividend withholding tax already imposed on distributions under the existing 1965 Dividend Withholding Tax Act so that the overall effective rate of withholding of dividend withholding tax and tax haven withholding tax combined would not exceed the highest corporate income tax rate in effect at the time of the distribution (currently 25%). The bill is subject to amendment during the course of the legislative process and it needs to be approved by both chambers of the Dutch parliament before it can enter into force.

One or more taxing authorities could challenge our exclusive Dutch residency for corporate income tax purposes, and if such challenge were to be successful, we could be subject to increased and/or different taxes than we expect, including potentially a Dutch dividend withholding tax in respect of a deemed distribution of our entire market value less paid-up capital.

As a company incorporated under the laws of the Netherlands, we are deemed to be a resident for Dutch corporate income tax and dividend withholding tax purposes. This means that, throughout our existence, we are subject to Dutch corporate income tax as a resident taxpayer and our shareholders are subject to Dutch dividend withholding tax. Depending on the way we conduct our business, however, tax authorities of other jurisdictions may claim that we are (also) a tax resident in their jurisdiction, in which case we may be also

 

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subject to corporate taxation in such other jurisdiction and distributions made by us to our shareholders may suffer withholding taxes imposed by such jurisdiction in addition to any Dutch dividend withholding tax. To resolve such dual tax residency issues, we may have access to international tax dispute resolution mechanisms under tax treaties or, if double taxation occurs within the European Union, the European Union Arbitration Directive, or we can submit our case for judicial review in the jurisdictions concerned. These procedures would require substantial time, costs and efforts and it is not certain whether double corporate and dividend withholding taxation can be resolved under all circumstances.

In addition, under a proposal of law currently pending before the Dutch parliament, the Emergency act conditional dividend exit tax (Spoedwet conditionele eindafrekening dividendbelasting “Dividend Exit Tax”), we will be deemed to have distributed an amount equal to our entire market capitalization less recognized paid-up capital immediately before the occurrence of certain events, including if we cease to be a Dutch tax resident for the purposes of a tax treaty concluded by the Netherlands and become, for the purposes of such tax treaty, a tax resident of a jurisdiction that does not impose a withholding tax on dividends which is comparable to the Dutch dividend withholding tax or that does impose such a tax, but does not impose such tax on increases in our market capitalization attributable to the period during which we were a tax resident of the Netherlands for the purposes of this treaty. This deemed distribution will be subject to a 15% tax. An automatic interest free unconditional indefinite extension for the full amount of the tax will be granted. However, the extension will expire, inter alia, if and to the extent we would make distributions after the taxable event for the purposes of the Dividend Exit Tax (in respect of which the extension is granted). In that event, the Dividend Exit Tax rules prescribe that we have a right to recover the amount of deferred tax that has become due from our shareholders through compensation with the shareholder’s dividend receivable, irrespective of whether that shareholder held Class A Shares at the time we became a tax resident of the other jurisdiction. If we do not recover this amount from our shareholders, we will have to pay such part of the deferred tax ourselves. It is not certain whether the Dividend Exit Tax will be enacted and if so, whether in its present form or with amendments. If enacted in its present form before the Dutch parliament, the Dividend Exit Tax will have retroactive effect from September 18, 2020.

Risks Related to the Offering and Ownership of our Class A Shares

Our results of operations and common share price may be volatile, and the market price of our Class A Shares after this offering may drop below the price you pay.

Our quarterly results of operations are likely to fluctuate in the future in response to numerous factors, many of which are beyond our control, including each of the factors set forth above. In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could subject the market price of our Class A Shares to wide price fluctuations regardless of our operating performance. Our results of operations and the trading price of our Class A Shares may fluctuate in response to various factors, including the risks described above.

These and other factors, many of which are beyond our control, may cause our results of operations and the market price and demand for our Class A Shares to fluctuate substantially. Fluctuations in our quarterly results of operations could limit or prevent investors from readily selling their common shares and may otherwise negatively affect the market price and liquidity of our Class A Shares. In addition, in the past, when the market price of a share has been volatile, holders of that share have sometimes instituted securities class action litigation against the company that issued the shares. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.

We cannot assure you that a market will develop for our Class A Shares or what the price of our Class A Shares will be, and public trading markets may experience volatility. Investors may not be able to resell their Class A Shares at or above the initial public offering price.

Before this offering, there was no public trading market for our Class A Shares, and we cannot assure you that one will develop or be sustained after this offering. If a market does not develop or is not sustained, it may be

 

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difficult for you to sell your Class A Shares. Public trading markets may also experience volatility and disruption. This may affect the pricing of the Class A Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Class A Shares and the extent of regulation applicable to us. We cannot predict the prices at which our Class A Shares will trade. The initial public offering price for our Class A Shares will be determined through our negotiations with the underwriters and may not bear any relationship to the market price at which our Class A Shares will trade after this offering or to any other established criteria of the value of our business. It is possible that, in future quarters, our results of operations may be below the expectations of securities analysts and investors. As a result of these and other factors, the price of our Class A Shares may decline.

Upon the closing of this offering, we will be a Dutch public company. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions and may not protect investors in a similar fashion afforded by incorporation in a U.S. jurisdiction.

Upon the closing of this offering, we will be a public limited liability company (naamloze vennootschap) incorporated under the laws of the Netherlands. Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. However, there can be no assurance that Dutch law will not change in the future or that it will serve to protect investors in a similar fashion afforded under corporate law principles in the U.S., which could adversely affect the rights of investors.

The rights of shareholders and the responsibilities of directors may be different from the rights and obligations of shareholders and directors in companies governed by the laws of U.S. jurisdictions. In the performance of their duties, our directors are required by Dutch law to consider the interests of the Company and its business, including the interests of its shareholders, its employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.

For more information on relevant provisions of Dutch corporate law and of our articles of association, see “Description of Share Capital” and “Comparison of Netherlands Corporate Law and Delaware Corporate Law.”

We are eligible to be treated as an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A Shares less attractive to investors because we may rely on these reduced disclosure requirements.

We are eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the JOBS Act.

For as long as we continue to be an emerging growth company, we may take advantage of certain reduced reporting and other requirements that are otherwise generally applicable to public companies, including presenting only limited selected financial data and not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, which would otherwise be required beginning with our second annual report on Form 20-F. As a result, our shareholders may not have access to certain information that they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if our total annual revenue exceeds $1.07 billion, if we issue more than $1.0 billion in non-convertible debt securities during any three-year period, or if before that time we are a “large accelerated filer” under U.S. securities laws. We cannot predict if investors will find our Class A Shares less attractive because we may rely on these exemptions. If some investors find our Class A Shares less attractive as a result, there may be a less active trading market for our Class A Shares and our share price may be more volatile.

 

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We will be a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.

As we are a foreign private issuer and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We do not currently intend to rely on this “foreign private issuer exemption” and instead will avail ourselves of the controlled company exemption which exempts us from certain governance requirements of Nasdaq. We may, however, in the future elect to avail ourselves of the foreign private issuer exemption and follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2021. In the future, we would lose our foreign private issuer status if (i) more than 50% of our outstanding voting securities are owned by U.S. residents and (ii) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will be required to report under U.S. GAAP, which could alter our results of operations or depict different trends of results of operations. We will also have to comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other

 

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expenses in order to maintain a listing on a U.S. securities exchange. These expenses will relate to, among other things, the obligation to present our financial information in accordance with U.S. GAAP in the future.

We have elected to take advantage of the “controlled company” exemption to the corporate governance requirements for Nasdaq-listed companies, which could make our Class A Shares less attractive to some investors or otherwise harm the price of our Class A Shares.

A “controlled company” under Nasdaq corporate governance requirements is a company of which more than 50% of the voting power is held by an individual, group or another company. Following this offering, Altice International will control a majority of the voting power of our outstanding common shares, making us a “controlled company” within the meaning of Nasdaq corporate governance requirements. Because we qualify as a “controlled company” under the corporate governance requirements for Nasdaq companies, we are not required to have a majority of our non-executive directors be independent, nor are we required to have an independent compensation committee or an independent nominating function (except as contemplated by the Dutch Corporate Governance Code (the “DCGC”) on a comply or explain basis). In light of our status as a “controlled company”, a majority of our directors will not be independent and we will not have a nominating committee. In addition, although our compensation committee will initially consist entirely of independent directors, we are not required to have an independent compensation committee and the composition of the committee may change in the future. Our status as a “controlled company” could make our Class A Shares less attractive to some investors or otherwise harm the price of our Class A Shares.

We are not obligated to, and do not, comply with all best practice provisions of the Dutch Corporate Governance Code.

Upon the closing of this offering, we will be subject to the DCGC. The DCGC contains both principles and best practice provisions on corporate governance that regulate relations between the executive directors, the non-executive directors and the general meeting and matters in respect of financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC is based on a “comply or explain” principle. Accordingly, companies are required to disclose in their annual reports, filed in the Netherlands, whether they comply with the provisions of the DCGC. If they do not comply with those provisions (for example, because of a conflicting Nasdaq requirement), such company is required to give the reasons for such non-compliance. The DCGC applies to Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including Nasdaq. We do not comply with all best practice provisions of the DCGC. See “Description of Share Capital.” This may affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

The dual-class structure of the Company’s Common Shares will have the effect of concentrating voting control with Altice International. This will limit or preclude our shareholders’ ability to influence corporate matters, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction requiring shareholder approval. Class B Shares will not automatically convert to Class A Shares upon transfer to a third party and the voting control may therefore shift to another person upon a transfer of the Class B Shares.

Each Class B Share is entitled to 25 votes per share and each Class A Share is entitled to one vote per share. Because of the 25:1 voting ratio between our Class B Shares and Class A Shares, a majority of the combined voting power of our share capital will be held or controlled (through Altice International) by Patrick Drahi. This will allow Altice International to control all matters submitted to our general meeting for approval until such date as Altice International ceases to hold, or to have the right to vote, shares representing a majority of the outstanding votes. This concentrated control will limit or preclude the ability of the holders of Class A Shares to influence corporate matters for the foreseeable future, including the election of directors, amendment of our articles of association and any merger, demerger, sale of all or substantially all of our assets or other major corporate transaction requiring approval of our general meeting. The disparate voting rights of the Class A Shares and Class B Shares may also prevent or discourage unsolicited acquisition, proposals or offers for

 

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our share capital that our shareholders may feel are in their best interest. For additional information, see “Description of Share Capital.” Our Class B Shares are convertible into our Class A Shares at the option of the holder at any time. Our articles of association do not provide for the automatic conversion of Class B Shares into Class A Shares upon transfer under any circumstances. The holders of Class B Shares thus will be free to transfer them without converting them into Class A Shares.

Altice International controls the direction of our business, and its concentrated ownership of our share capital will prevent you and other shareholders from influencing significant decisions.

After giving effect to the sale of our Class A Shares pursuant to this offering, Altice International will control (directly or indirectly) 98.5% (or 98.3% if the underwriters exercise their option to purchase additional Class A Shares from the selling shareholders in full) of the aggregate voting power in the Company. For so long as Altice International continues to control a majority of the voting power, it will generally be able to significantly influence the outcome of all corporate actions requiring approval of the general meeting.

So long as Altice International continues to control a majority of the voting power of our shares, it will be able to influence the composition of our board of directors and thereby influence our policies and operations, including the appointment of management, future issuances of shares or other securities, the payment of dividends, if any, on shares, the incurrence or modification of debt by us, amendments to our articles of association and the entering into extraordinary transactions, and its interests may not in all cases be aligned with our other shareholders’ interests. In addition, Altice International may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment or improve its financial condition, even though such transactions might involve risks to our other shareholders. For example, Altice International could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets.

In addition, Altice International will be able to cause or prevent a change of control of the Company and could preclude any unsolicited acquisition of the Company. The concentration of ownership could deprive our other shareholders of an opportunity to receive a premium for their Class A Shares as part of a sale of the Company and ultimately may affect the market price of our Class A Shares.

As a result, Altice International and its affiliates’ interests may not be the same as, or may conflict with, the interests of our other shareholders or our interests. Investors in this offering will not be able to affect the outcome of a shareholder vote while Altice International controls the majority of the voting power in the general meeting. Because Altice International’s interests may differ from those of our other shareholders, actions that Altice International takes with respect to us, as our controlling shareholder, may not be favorable to us or to our other shareholders.

If you purchase Class A Shares in this offering, you will suffer immediate and substantial dilution of your investment.

The initial public offering price of our Class A Shares is substantially higher than the net tangible book deficit per share. Therefore, if you purchase our Class A Shares in this offering, you will pay a price per share that substantially exceeds our pro forma net tangible book deficit per share after this offering. Based on the initial public offering price of $19.50 per Class A Share, you will experience immediate dilution of $18.17 per share, representing the difference between our pro forma net tangible book value per share after giving effect to this offering at the initial public offering price. We also have a number of outstanding options to purchase Class A Shares with exercise prices that are below the initial public offering price of our Class A Shares. To the extent that these options are exercised, you will experience further dilution. See “Dilution” for more detail.

 

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Shareholders may not be able to exercise pre-emptive rights and, as a result, may experience substantial dilution upon future issuances of Class A Shares. Furthermore, Class A Shares acquired by the Company in its own share capital following a conversion of Class B Shares into Class A Shares may be disposed of by the Company and, as a result, shareholders may experience dilution of their interest.

In the event of an issuance of Class A Shares, subject to certain exceptions, each shareholder will have a pro rata pre-emptive right in proportion to the aggregate nominal value of the Class A Shares held by such shareholder. These pre-emptive rights may be restricted or excluded by a resolution of the general meeting or by another corporate body designated by the general meeting. Prior to the closing of this offering, our board of directors will be authorized, for a period of five years, to issue shares or grant rights to subscribe for shares up to our authorized share capital from time to time and to limit or exclude pre-emptive rights in connection therewith. This designation may be renewed, amended or extended by special resolution at a general meeting, and the Company plans to seek such renewal in the future. In addition, pre-emptive rights do not exist with respect to the issue of preference shares, with a nominal value of four eurocent (€ 0.04) each (“Preference Shares”) and holders of Preference Shares, if any, have no pre-emptive right to acquire newly issued Common Shares. Also, pre-emptive rights do not exist with respect to the issue of shares or grant of rights to subscribe for shares to employees of the Company or contributions in kind. This could cause our existing shareholders to experience substantial dilution of their interest in us.

In the event of a conversion of Class B Shares into Class A Shares, the Company will immediately upon such conversion acquire 24 Class A Shares in its own share capital for no consideration for each converted Class B Share. The Company may dispose of these Class A Shares pursuant to a resolution of the board of directors. This could cause our existing shareholders to experience substantial dilution of their interest in us.

Certain anti-takeover provisions in our articles of association and under Dutch law may prevent or could make an acquisition of the Company more difficult, limit attempts by our shareholders to replace or remove directors and may adversely affect the market price of our Class A Shares.

Our articles of association that will be in effect upon closing of this offering contain provisions that could delay or prevent a change in control of the Company. These provisions could also make it difficult for shareholders to appoint directors or take other corporate actions, including effecting changes in our management. These provisions include:

 

   

a provision that our executive and non-independent non-executive directors may only be appointed upon binding nomination of Next Alt S.à r.l. (the “Nominating Shareholder” or “Next Alt”), which can only be overruled with a two-thirds majority of votes cast representing at least 50% of our issued share capital;

 

   

a provision that our executive and non-independent non-executive directors may only be removed by the general meetings by a two-thirds majority of votes cast representing at least 50% of our issued share capital if such removal is not proposed by the Nominating Shareholder;

 

   

the term of office of our directors, as a result of which half of the directors will in principle be subject to election upon three years and the other half will be subject to election upon four years;

 

   

the inclusion of Preference Shares in our authorized share capital that may be issued by our board of directors, in such a manner as to dilute the interest of shareholders;

 

   

requirements that certain matters, including an amendment of our articles of association, may only be brought to our shareholders for a vote upon a proposal by our board of directors;

 

   

minimum shareholding thresholds, based on nominal value, for shareholders to call general meetings or to add items to the agenda for those meetings; and

 

   

a right for our board of directors to invoke a statutory response time of 250 days.

 

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See “Description of Share Capital—Anti-takeover provisions.”

As a public reporting company, we will be subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. If we fail to put in place appropriate and effective internal controls over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results, or report them in a timely manner, which may adversely affect investor confidence in us and, as a result, the value of our Class A Shares.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on our system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. As a public company, we will be required to report, among other things, control deficiencies that constitute a “material weakness” or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

If our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on our internal control over financial reporting, when required, or if additional material weaknesses or deficiencies in our internal controls are identified, we could be subject to sanctions or investigations by the SEC or other regulatory authorities, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our share price may be adversely affected.

As a result of becoming a public company in the U.S., we will become subject to additional regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act.

As a foreign private issuer listed on Nasdaq, we will incur legal, accounting and other expenses that we did not previously incur. We will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements and other applicable securities rules and regulations, as well as the U.S. Foreign Corrupt Practices Act. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources. The Exchange Act requires that, as a public company, we file or furnish annual and certain other reports with respect to our business, financial condition and result of operations. We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs. Any changes we make to comply with these obligations may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or to serve as executive officers, or make it more difficult or expensive for us to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports. Effective internal controls, together with adequate disclosure controls and procedures, are designed to

 

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prevent or detect material misstatement due to fraud or error and to provide reasonable assurance as to the reliability of financial reporting. Deficiencies in our internal controls may adversely affect our management’s ability to record, process, summarize and report financial data on a timely basis. As a public company, we will be required by Section 404 of the Sarbanes-Oxley Act to include a report of management’s assessment on our internal control over financial reporting and, beginning with our annual report for the year ending December 31, 2022 or when we cease to be an emerging growth company, an independent auditor’s attestation report on our internal control over financial reporting in our annual reports on Form 20-F, subject to certain exceptions. Compliance with Section 404 of the Sarbanes-Oxley Act will significantly increase our compliance costs and management’s attention may be diverted from other business concerns, which could adversely affect our financial performance. We may need to hire more team members in the future or engage outside consultants to comply with these requirements, which would further increase expenses. If we fail to comply with the applicable requirements of the Sarbanes-Oxley Act in the required timeframe, we may be subject to sanctions, investigations or other enforcement actions by regulatory authorities, including the SEC and Nasdaq.

Prior to this offering, neither we nor our independent registered public accounting firm were required to deliver an opinion on the effectiveness of our internal control over financial reporting. We, and our independent registered public accounting firm, were not required to perform an evaluation of our internal control over financial reporting as of December 31, 2020 and December 31, 2019 in accordance with the provisions of the Sarbanes-Oxley Act. Accordingly, we cannot assure you that we have identified all material weaknesses or that there will not be additional material weaknesses or deficiencies that we will identify.

As of December 31, 2020 and December 31, 2019, we identified material weaknesses in our internal control over financial reporting. The material weaknesses we identified were as follows:

 

   

We did not maintain an effective control environment to ensure that: (i) there was accountability for the performance of internal control over financial reporting responsibilities; (ii) personnel with key positions had the appropriate training to carry out their responsibilities; and (iii) corrective activities were appropriately applied, prioritized, and implemented in a timely manner. This material weakness contributed to other material weaknesses within the system of internal control over financial reporting in the following Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) components as below.

 

   

A material weakness in the risk assessment COSO component, which related to deficiencies in design and implementation of controls related to: (i) identifying, assessing, and clearly communicating appropriate objectives; (ii) identifying and analyzing risks to achieve these objectives; (iii) considering the potential for fraud in assessing risks; and (iv) identifying and assessing changes in the business that could impact the Company’s system of internal controls. The risk assessment material weakness contributed to a material weakness in monitoring activities.

 

   

A material weakness in the control activities COSO component, which related to deficiencies in design and implementation of controls related to: (i) selecting and developing control activities and information technology that contribute to the mitigation of risks and support achievement of objectives; and (ii) deploying control activities through policies that establish what is expected and procedures that put policies into action.

The following were contributing factors to the material weakness in control activities:

 

   

insufficient design and implementation of general information technology controls within access security, system change control and data center and computer operations areas;

 

   

lack of consistently established controls to: i) review and approve manual journal entries; and ii) segregation of the function of recording and approving journal entries;

 

   

insufficient evidence of controls related to the review of reconciliations specifically related to revenue, cost of revenue, and cash and cash equivalents; and

 

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insufficient resources within the accounting and financial reporting department to properly address segregation of duties.

 

   

A material weakness in monitoring activities, which relate to control deficiencies in the design and implementation of controls related to: (i) selecting, developing, and performing ongoing evaluation to ascertain whether the components of internal controls are present and functioning; and (ii) evaluating and communicating internal control deficiencies in a timely manner to those parties responsible for taking corrective action.

These control deficiencies did not result in errors that were material to our annual consolidated financial statements. However, these control deficiencies could result in a misstatement in our accounts or disclosures that would result in a material misstatement to the annual consolidated financial statements that would not be prevented or detected. Accordingly, we determined that these control deficiencies constitute material weaknesses.

We are in the process of planning and implementing measures designed to remediate the material weaknesses in our internal control over financial reporting, which include:

 

   

establishing an audit committee which demonstrates independence from management and exercises oversight;

 

   

engaging an external specialist to begin implementing our Sarbanes-Oxley compliance program, taking into consideration Sarbanes-Oxley governance, risk assessment processes, testing methodologies and corrective action mechanisms. We will enhance our risk assessment procedures and conduct a comprehensive risk assessment, which includes the risk of fraud, to enhance overall compliance;

 

   

strengthening general information technology controls across the group, which includes deploying a standardized accounting application across the group, and the enhancement of the design of access security, system change control and data center and computer operations areas. As of December 31, 2020, we have deployed the standardized application in three subsidiaries, and plan to continue the roll out in additional subsidiaries through 2021, and beyond;

 

   

re-assessing and revising our processes to strengthen controls over the review and approval of journal entries and account reconciliations. Specifically, reinforcing existing policies and procedures regarding obtaining adequate supporting documentation in connection with the review and approval of journal entries and account reconciliations and enhancing staffing and systems controls to improve segregation of duties related to journal entry processing and completion and review of account reconciliations;

 

   

formalizing documentation of accounting and reporting policies and procedures and conducting in-depth training on such policies and procedures; and

 

   

continuing to evaluate and hire additional resources within our accounting and financial reporting and internal controls functions with the appropriate experience, certifications, education, and training for key financial reporting and accounting positions.

The implementation of our remediation plan may be time consuming and may place significant demands on our financial and operational resources. We cannot assure you, however, that these remediation measures will fully address the material weaknesses in our internal control over financial reporting or that we will conclude that the material weaknesses have been fully remediated. We may take additional measures, or modify the plan, to remediate the material weaknesses. Additionally, we cannot assure you that we will not identify a material weakness or significant deficiency in the future. If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately and timely report on our operating results or financial condition, which could adversely affect investor confidence in the Company and the market price of our Class A Shares.

 

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A significant portion of our total issued and outstanding Class A Shares are eligible to be sold into the market in the near future, which could cause the market price of our Class A Shares to drop significantly, even if our business is doing well.

Sales of a substantial number of our Class A Shares in the public market, or the perception in the market that the holders of a large number of Class A Shares intend to sell, could reduce the market price of our Class A Shares. Following the closing of this offering, we will have 238,095,240 Common Shares outstanding, consisting of 66,866,544 Class A Shares outstanding (or 71,820,865 Class A Shares outstanding if the underwriters exercise their option to purchase additional Class A Shares in full). All of the Class A Shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless such shares are purchased by “affiliates” as that term is defined in Rule 144 under the Securities Act (“Rule 144”). Upon the closing of this offering, approximately 171,228,696 Class B Shares (or approximately 166,274,375 if the underwriters exercise the option to purchase additional Class A Shares in full) will be held by Altice International and convertible into Class A Shares as described herein. These shares and all remaining shares that will be outstanding upon closing of this offering (other than the Class A Shares sold in this offering) will be “restricted securities” as that phrase is defined in Rule 144. Subject to certain contractual restrictions, including the lock-up agreements described below, holders of restricted shares will be entitled to sell those shares in the public market if they qualify for an exemption from registration under Rule 144 or any other applicable exemption under the Securities Act.

We and all of the selling shareholders, including all of our directors, executive officers and the holders of all of our Class B Shares, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our Class A Shares or securities convertible into or exchangeable for common shares during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman Sachs Bank Europe SE and Morgan Stanley & Co. LLC. Such Class A Shares will, however, be able to be resold after the expiration of the lock-up periods, as well as pursuant to customary exceptions thereto or upon the waiver of the lock-up arrangements. See “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our Class A Shares after this offering.

In the future, we may also issue additional securities if we need to raise capital or make acquisitions, which could constitute a material portion of our then-issued and outstanding share capital.

We may not pay dividends on our Common Shares in the future and, consequently, your ability to achieve a return on your investment will depend on the appreciation in the price of our Class A Shares.

We may not pay any cash dividends on our Common Shares in the future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends is, and may be, limited by covenants of any future indebtedness we or our subsidiaries incur. Therefore, any return on investment in our Class A Shares is solely dependent upon the appreciation of the price of our Class A Shares on the open market, which may not occur. See “Dividend Policy.”

Teads N.V. is a holding company with no operations of its own and, as such, it depends on its subsidiaries for cash to fund its operations and expenses, including future dividend payments, if any.

As a holding company, our principal source of cash flow will be distributions or payments from our operating subsidiaries. Therefore, our ability to fund and conduct our business, service our debt and pay dividends, if any, in the future will depend on the ability of our subsidiaries and intermediate holding companies to make upstream cash distributions or payments to us, which may be impacted, for example, by their ability to generate sufficient cash flow or limitations on the ability to repatriate funds whether as a result of currency liquidity restrictions, monetary or exchange controls or otherwise. Our operating subsidiaries and intermediate holding companies are separate legal entities, and although they are directly or indirectly wholly owned and

 

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controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. To the extent the ability of any of our subsidiaries to distribute dividends or other payments to us is limited in any way, our ability to fund and conduct our business, service our debt and pay dividends, if any, could be harmed.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our Class A Shares adversely, our share price and trading volume of our Class A Shares could decline.

The trading market for our Class A Shares is influenced by the research and reports that industry or securities analysts publish about us, our business, our market or our competitors. If any of the securities or industry analysts who cover us or may cover us in the future change their recommendation regarding our Class A Shares adversely, or provide more favorable relative recommendations about our competitors, the price of our Class A Shares would likely decline. If any securities or industry analyst who covers us or may cover us in the future were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume of our Class A Shares to decline.

Claims of U.S. civil liabilities may not be enforceable against us.

We are incorporated under the laws of the Netherlands, and our operational headquarters are located in France. Most of our assets are located outside the U.S. The majority of our directors reside outside the U.S. As a result, it may not be possible for investors to effect service of process within the U.S. upon such persons or to enforce against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the U.S.

There is currently no treaty between the U.S. and the Netherlands for the mutual recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the U.S. based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be enforceable in the Netherlands unless the underlying claim is relitigated before a Dutch court of competent jurisdiction. Under current practice, however, a Dutch court will generally, subject to compliance with certain procedural requirements, grant the same judgment without a review of the merits of the underlying claim if such judgment (i) is a final judgment and has been rendered by a court which has established its jurisdiction vis-à-vis the relevant Dutch companies or Dutch company, as the case may be, on the basis of internationally accepted grounds of jurisdiction; (ii) has not been rendered in violation of principles of proper procedure (behoorlijke rechtspleging); (iii) is not contrary to the public policy of the Netherlands; and (iv) is not incompatible with (a) a prior judgment of a Dutch court rendered in a dispute between the same parties, or (b) a prior judgment of a foreign court rendered in a dispute between the same parties, concerning the same subject matter and based on the same cause of action, provided that such prior judgment is capable of being recognized in the Netherlands and except to the extent that the foreign judgment contravenes Dutch public policy (openbare orde). Dutch courts may deny the recognition and enforcement of punitive damages or other awards. Moreover, a Dutch court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate actual losses or damages. Enforcement and recognition of judgments of U.S. courts in the Netherlands are solely governed by the provisions of the Dutch Code of Civil Procedure.

Based on the foregoing, there can be no assurance that U.S. investors will be able to enforce any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws, against us or our directors, executive officers or certain experts named herein who are residents of or possessing assets in countries other than the U.S.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information contained in the sections entitled “Prospectus Summary,” “Summary Historical Consolidated Financial and Other Data,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of the information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are, or will be, important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:

 

   

our ability to maintain and grow our relationship with customers and publishers;

 

   

our ability to differentiate to compete effectively or continue to improve our competitive advantages over new emerging businesses;

 

   

our ability to maintain our profitability and manage business and compliance risks;

 

   

our failure to innovate and make the right investment decisions in our offerings and platform;

 

   

the laws and regulations to which we and our customers and publishers are subject globally and the adverse development of the use of digital advertising by customers through opt-in, opt-out or ad-blocking technologies or other means;

 

   

our ability to manage our growth effectively;

 

   

our ability to detect or prevent fraud on our platform, or malware intrusions into the system;

 

   

our ability to maintain a consistently high level of service experience and implement and communicate high-quality corporate sustainability and social purpose activities;

 

   

the impact of the COVID-19 pandemic on our business, financial condition, financial performance and liquidity;

 

   

our ability to scale our platform infrastructure to support anticipated growth and transaction volume; and

 

   

the other risks and uncertainties described under “Risk Factors.”

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this prospectus that could cause actual results to differ before making an investment decision to purchase our Class A Shares. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

 

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USE OF PROCEEDS

We will not receive any of the proceeds from the Class A Shares sold by the selling shareholders.

 

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DIVIDEND POLICY

We do not currently anticipate paying dividends on our Class A Shares or Class B Shares and we do not anticipate paying any dividends on our Class A Shares or Class B Shares in the foreseeable future. Under Dutch law, we may only pay dividends and other distributions from our reserves to the extent our shareholders’ equity (eigen vermogen) exceeds the sum of the paid-in and called-up share capital plus the reserves required to be maintained by Dutch law or by our articles of association and (if it concerns a distribution of profits) after adoption of the annual accounts by the general meeting from which it appears that such dividend distribution is allowed. Subject to such restrictions, any declaration and payment of future dividends or other distributions to holders of Class A Shares or Class B Shares will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our board of directors deems relevant, including any contractual prohibitions with respect to payment of distributions. See “Risk Factors—Risks Related to the Offering and Ownership of our Class A Shares—We may not pay dividends on our Common Shares in the future and, consequently, your ability to achieve a return on your investment will depend on the appreciation in the price of our Class A Shares.”

Under Dutch law and our articles of association, our board of directors may decide that all or part of the profits are added to our reserves. Before reservation of any profit, and if and to the extent Preference Shares are outstanding, first a preferred amount per annum is added to the retained earnings reserve exclusively for the benefit of the holders of Preference Shares. This preferred dividend shall be calculated on the basis of a fixed rate over the amount paid-up on the outstanding Preference Shares pro rata tempore for the period during which they were outstanding during the financial year concerned, and shall include any arrears in payment of prior years’ preferred dividends (if any). Thereafter, our board of directors may decide that all or part of the remaining profits shown in our adopted statutory annual accounts will be added to our reserves. After reservation of any such profits, any remaining profit will be at the disposal of the general meeting, subject to restrictions of Dutch law. Our board of directors is permitted, subject to certain requirements, to declare interim dividends without the approval of the general meeting. Dividends and other distributions shall be made payable no later than a date determined by us. Claims to dividends and other distributions not made within five years from the date that such dividends or distributions became payable will lapse, and any such amounts will be considered to have been forfeited to us (verjaring).

 

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CAPITALIZATION

The following table sets forth the cash and cash equivalents and capitalization as of March 31, 2021, as adjusted for the corporate reorganization. See “Prospectus Summary—Corporate Reorganization.”

The following table is derived from and should be read together with the sections of this prospectus entitled “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and accompanying notes included elsewhere in this prospectus.

 

     As of March 31, 2021†  
     Actual      As Adjusted  
     (in thousands)  

Cash and cash equivalents

   $ 53,087      $ 16,134  
  

 

 

    

 

 

 

Long-term debt (including current portion)

     

Deferred debt transaction costs

   $      $  

Lease liabilities

   $ 26,881      $ 26,881  

Others

   $      $ 16,598  
  

 

 

    

 

 

 

Total long-term debt

   $ 26,881      $ 43,478  
  

 

 

    

 

 

 

Owners’ equity:

     

Share capital & share premium

   $ 133,070      $ 133,070  

Retained earnings

   $ 254,841      $ 254,841  

Reserves

   $ (22,620    $ (22,620
  

 

 

    

 

 

 

Total owners’ equity

   $ 365,291      $ 365,291  
  

 

 

    

 

 

 

Total capitalization

   $ 391,497      $ 337,946  
  

 

 

    

 

 

 

 

The amount of cash available and receivables relating to the cash management mechanism within the Teads group upon the closing of this offering has been reduced as a result of corporate and financial transactions as part of the corporate reorganization (See “Prospectus Summary—Corporate Reorganization”).

 

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DILUTION

If you invest in our Class A Shares in this offering, you will experience immediate and substantial dilution in the net tangible book value per share of our Class A Shares upon the closing of this offering.

Our net tangible book value as of March 31, 2021, was approximately $316.3 million, or approximately $1.33 per share. As used in this “Dilution” section, our net tangible book value per share is determined by dividing our net tangible book value (tangible assets less total liabilities) by the total number of our outstanding Common Shares that will be outstanding after giving effect to the closing of this offering.

After giving effect to the sale of Class A Shares in this offering at an assumed initial public offering price of $19.50 per share (the midpoint of the price range set forth on the cover page of this prospectus), our pro forma net tangible book value as of March 31, 2021 would have been approximately $316.3 million, or approximately $1.33 per share. This represents an immediate dilution (i.e., the difference between the offering price and the pro forma net tangible book value after this offering) to new investors participating in this offering of $18.17 per share.

The following table illustrates the per share dilution to new investors participating in this offering:

 

Assumed initial public offering price per share

   $ 19.50  

Net tangible book value per share as of March 31, 2021

   $ 1.33  

Increase per share attributable to new investors in this offering

      
  

 

 

 

Pro forma net tangible book value per share

   $ 1.33  
  

 

 

 

Dilution per share to new investors in this offering(1)

   $ 18.17  
  

 

 

 

 

(1)

Dilution is determined by subtracting pro forma net tangible book value per share from the initial public offering price paid by a new investor.

The following table summarizes on an adjusted pro forma basis as of March 31, 2021, the total number of Class A Shares owned by existing holders and to be owned by the new investors in this offering, the total consideration paid, and the average price per share paid by our existing holders and to be paid by the new investors in this offering at $19.50, the midpoint of the price range set forth on the cover page of this prospectus, calculated before deducting estimated discounts and commissions and offering expenses:

 

     Shares Purchased     Total Consideration     Average Price
Per Share
 
     Number      Percentage     Amount      Percentage  

Existing holders

     199,595,240        84   $ 283,042,667        27   $ 1.42  

New investors in this offering

     38,500,000        16   $ 750,750,050        73   $ 19.50  

Total

     238,095,240        100   $ 1,033,792,667        100  

A $1.00 increase (decrease) in the assumed initial public offering price of $19.50 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would not increase (decrease) our net tangible book value as of March 31, 2021, or the pro forma net tangible book value per share and the dilution in adjusted pro forma net tangible book value per share to new investors in this offering would increase (decrease) by $1.00 per share, assuming the number of shares offered by the selling shareholders, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and offering expenses.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements, the related notes to the consolidated financial statements, the unaudited condensed interim consolidated financial statements and the related notes to the unaudited condensed interim consolidated financial statements of Teads S.A. included elsewhere in this prospectus. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations, and involve risks and uncertainties. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly under the captions “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Overview

We operate a leading, cloud-based, end-to-end technology platform that enables programmatic digital advertising for a global, curated ecosystem of quality advertisers and their agencies and quality publishers. We operate in the Open Web outside of the Walled Gardens. As an end-to-end solution, our platform consists of buy-side, sell-side, creative, data and AI optimization modules. As a result, we have built deep partnerships with both the demand and supply sides of digital advertising. For advertisers and their agencies, our platform offers a single access point to buy the inventory of many of the world’s best publishers. Through exclusive partnerships with these premium publishers, we enable customers to reach 1.9 billion unique monthly users (as of April 2021), while improving the efficiency, quality and cost of digital ad transactions. For about 3,100 publishers, we are a trusted monetization partner, providing the technology required to monetize their most valuable ad inventory programmatically. By connecting both sides through our integrated platform, known as the Teads Global Media Platform, we solve the digital programmatic advertising industry’s most significant problems related to value chain fragmentation, inefficient digital advertising pricing and quality and scale of inventory. We refer to the ecosystem enabled by Teads Global Media Platform as the Curated Internet.

Our innovative and comprehensive set of products have been trusted by publishers on the Open Web for almost a decade. In 2012, we pioneered an industry-defining video advertising format known as outstream, which is embedded in-article, specifically in between two paragraphs of editorial text. This invention immediately solved one of the biggest problems in digital advertising related to the lack of quality video inventory. Our platform is also capable of delivering display ads, which are the preferred advertising format for performance-oriented campaigns, as well as other web and app formats.

We generate revenue from our customers through programmatic advertising campaigns they book with us, using our platform to place ads on our publisher partners’ web and app properties. Though customers can use a third-party DSP to book campaigns since we are integrated into all major DSPs, they more often book campaigns using our own buying platform, Teads Ad Manager. By doing so, customers can set up their campaigns, upload creative assets to produce ad creatives, target users, set optimization criteria, control where their ads will be placed, schedule their campaigns and monitor the performance of the campaigns in the reporting interface. Customers that use Teads Ad Manager benefit from the data and insights of our end-to-end platform, which we believe results in better outcomes (i.e., ROI) than when they use a third-party DSP. On average in 2020, Teads Ad Manager delivered 24% lower CPMs, higher results on customers’ KPIs (including more than doubling the click-through rate and higher completion rate and viewability), and 100% more scale compared to DSPs. We believe our customers continue to choose us due to our scale and reach, high-quality ad placements and integrated technology platform. Our Gross Customer Retention Rates were 94% for each of the years ended December 31, 2019 and December 31, 2020. Large customers who spend more than $1 million annually with us represent a significant portion of our total revenue, contributing approximately 60% to our total revenue in the year ended December 31, 2020. We have almost doubled the number of large customers from 2017 to 2020 and have grown the revenue from our large customers at a CAGR of 33% from 2017 through 2020.

 

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We enable publishers to monetize their digital advertising inventory through our Teads for Publishers platform. This full monetization platform is comprised of our proprietary SSP, ad exchange, ad server, video player, ad quality management, a comprehensive self-serve interface, full set of ad formats and audience and other targeting capabilities, and is connected with DSPs and Teads’ own buying platform, Teads Ad Manager. As a result, we are deeply embedded with our publisher partners, who rely upon our technology platform to monetize their most valuable sources of ad inventory. We believe this drives publisher stickiness and retention. For the year ended December 31, 2020, our Publisher Retention Rate was approximately 99%. We operate exclusive partnerships with over 80% of our publishers for their in-article video inventory, demonstrating the value we deliver. Our longstanding publisher partnerships are aggregated into a highly curated version of the Open Web that includes many of the world’s leading publishers like The BBC, ESPN, Meredith, The Guardian, Bloomberg, The Washington Post, Vogue, L’Equipe, El Mundo, Der Spiegel, South China Morning Post and El Universal. Our Curated Internet reaches 1.9 billion unique monthly users worldwide (as of April 2021) and presents a significant value proposition to advertisers and agencies. As of March 31, 2021, we had about 3,100 editorial publishers on our platform, representing more than 15,000 web and app properties that provide access to more than one trillion ad opportunities every year.

The growing digitization of media and fragmentation of audiences has increased the complexity of advertising and thereby increased the need for automation in ad buying, reporting and analysis, which we provide with our platform. In order to grow, we will need to continue to develop our platform’s programmatic capabilities and access to quality advertising inventory. We believe that key opportunities specifically include our ongoing expansion into performance advertising, video and television ad inventory and continuing development of our data and advertising targeting capabilities.

Growth of the programmatic advertising market is important for our ability to grow our business. Adoption of programmatic advertising by advertisers allows us to acquire new customers and grow revenue from existing customers. Although our customers include some of the largest advertising agencies in the world, we believe there is significant room for us to expand further within these customers and gain a larger share of their advertising spend through our interface. We also believe that the industry trends noted above will lead to advertisers adopting programmatic advertising through platforms like ours.

Our growth and profitability have been underpinned by three key value propositions:

 

   

We provide customers with access to quality digital advertising supply at scale and achieve superior results for them through our platform.

 

   

We provide publishers with strong monetization through our suite of monetization solutions and by bringing premium customer demand.

 

   

We connect customers and publishers through a fully-integrated end-to-end platform that eliminates the complexity, inefficiencies and high costs that plague the Open Web.

This business model has allowed us to grow significantly and achieve profitability. Our profit for the year/period was $55.3 million for the year ended December 31, 2019 and $111.5 million for the year ended December 31, 2020, and $(1.0) million for the three months ended March 31, 2020 and $28.0 million for the three months ended March 31, 2021. Our Adjusted EBITDA* was $94.4 million for the year ended December 31, 2019 and $173.8 million for the year ended December 31, 2020, and $38.7 million for the three months ended March 31, 2020 and $6.4 million for the three months ended March 31, 2021.

Factors Affecting Our Performance

Growth and Retention of Customer Spend

Our recent growth has been driven by retaining and expanding our share of spend by our existing customers and adding new customers. Our customers include some of the largest advertisers and advertising

 

* 

Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see “Summary Historical Consolidated Financial and Other Data.”

 

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agencies in the world and we believe there is significant room for us to expand further within these customers, including growing existing budgets allocated to us as they continue to see strong ROI from our solutions and growing our suite of solutions offered to them. Our future revenue growth depends upon our ability to retain our existing customers and to gain a larger share of their advertising spend through our platform.

Growth and Retention of Publisher Inventory

Our growth has been driven by retaining and expanding the volume of inventory from our existing publisher partners and adding new ones. Our publisher partners include some of the largest and most prestigious publishing groups in the world and retaining them is key for us to continue to attract advertiser spend. Our Publisher Retention Rate was approximately 99% for the year ended December 31, 2020 and we believe we will continue to maintain a high level of retention. Additionally, we believe we can grow the volume of inventory from existing publishers as digital content consumption grows amongst consumers and we believe we can access additional placements on publisher’s pages. Although we already have a significant number of publishers, including what we believe to be the highest share of premium publishers in the industry, there are still opportunities with new publishers to pursue, especially in emerging markets. Our future revenue growth depends upon our ability to retain our existing publishers, grow the volume of inventory from these publishers and add new publishers.

Growth of Emerging and New Product Offerings

A key strategy to increase spend from customers is to access additional advertising spend by offering new products to them. One of our new products which represents the largest recent growth area for us is our performance advertising offering. We launched performance advertising three years ago and it has become a significant driver of our growth. We believe it will continue to grow at a rapid rate because we believe it has generated strong ROI for customers and there is significant potential to extend our existing relationships with customers into this type of advertising. Our future revenue growth will be impacted by our ability to grow our performance advertising business and other new products.

Ability to Respond to Industry Trends

Our development and growth as a company has been the result of successfully responding to shifts in industry trends. Our future revenue will be dependent on our ability to continue to do this. One particularly important development in the industry is the deprecation of the third-party cookie, a piece of code placed on websites to allow advertising technology companies like us to identify users for targeting and tracking purposes. Several internet browsers have already blocked third-party cookies and Google Chrome has announced they will also do this in 2022. We have been proactive on privacy issues and we believe we have been a first mover in developing alternative solutions that not only allow for targeting and tracking without third-party cookies but also do so without the need to individually identify users. We believe this puts us in a leadership position in the industry and we can benefit from additional advertising budgets shifted to us as other players in the market fail to make this transition.

Continuous Innovation and Ability to Attract New Talent

We have established a reputation in the industry as an innovator since we invented outstream video advertising and we have continued to develop and roll out new innovations in all parts of our business, including guaranteed outcome solutions, ground-breaking new ad formats and unique targeting solutions. We believe that this has not only helped us attract customers and publishers but also new talent which in turn drive further innovations. Our future revenue is dependent on our ability to continue to innovate.

Growth of Adoption of Teads Ad Manager

The growth of adoption of Teads Ad Manager, our buy-side platform that enables customers to leverage our full end-to-end solution, has been significant in the last three years. Although customers can access

 

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our platform and our publishers through a third-party DSP, we believe that when they use Teads Ad Manager as their access tool, they generally achieve better results and better ROI. Consequently, we believe that they spend more with us once they adopt Teads Ad Manager. Therefore, our future revenue is driven by our ability to continue to drive adoption of Teads Ad Manager as a buying platform.

Development of International Markets

For the last seven years, we have consistently increased our focus on markets outside of the U.S. and Europe to serve the global needs of our customers. We operate in 23 countries through a network of 36 offices located in EMEA, North America, South America and Asia Pacific. As a result of our significant international operations, the majority of our business is outside of Europe. We believe that the global opportunity for programmatic advertising is significant and should continue to expand as publishers and advertisers outside of the U.S. and Europe seek to take advantage of the benefits that it provides. To capitalize on this opportunity, we intend to invest further to grow our presence internationally, especially in Asia. Our growth and the success of our initiatives in newer markets will depend on the continued adoption of our platform by our existing customers, as well as new customers, in these markets.

Seasonality

In the advertising industry, companies commonly experience seasonal fluctuations in revenue. For example, many advertisers allocate the largest portion of their budgets to the fourth quarter of the year in order to coincide with increased holiday purchasing. Historically, the fourth quarter of the year reflects our highest level of advertising activity and the first quarter reflects the lowest level of such activity. We expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.

The COVID-19 Pandemic

On March 11, 2020, the COVID-19 outbreak was declared by the World Health Organization to be a global pandemic, highlighting the health risks of the disease. In this context and following regulatory requirements published by governments in the countries in which we operate, we activated a response program in order to minimize the impact of the COVID-19 pandemic.

The COVID-19 pandemic has had a limited impact on our annual consolidated financial statements for the year ended December 31, 2020. We were impacted by a decline in the advertising businesses in the second quarter of 2020 and, to a lesser degree, in the third quarter, resulting in a lower than planned annual growth rate for 2020. However, starting in the third quarter, we experienced a rebound in spend from our customers, and in the fourth quarter, we returned to double-digit year-over-year revenue growth. Historically, the Company always had a growth rate in excess of 20% year-over-year. In 2019, we experienced 29% revenue growth over the prior year (24% in the first quarter of 2019 over the comparable period of the prior year; 32% in the second quarter of 2019 over the comparable period of the prior year; 33% in the third quarter of 2019 over the comparable period of the prior year; and 28% in the fourth quarter of 2019 over the comparable period of the prior year).

In the second quarter of 2020, the Company’s revenue declined by 26% compared to the second quarter of 2019. The Company has taken initiatives to reduce its operating expenses in the field of marketing, travel and expenses, headcount-related costs and has renegotiated supplier contracts in order to alleviate the drop in revenue. As a result, in the second quarter of 2020, our profit for the quarter grew 40% compared to the second quarter of 2019 and Adjusted EBITDA* grew by 28% compared to the second quarter of 2019. Additionally, this strong cost control has led to a higher than budgeted profit for the year and Adjusted EBITDA for 2020, demonstrating our ability to achieve strong profitability despite a temporary slowdown in our business. Although the situation continues to evolve, we expect that the COVID-19 pandemic will have limited effects on our

 

* 

Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see “Summary Historical Consolidated Financial and Other Data.”

 

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operations and financial performance in future periods. See “Risk Factors—Our business and financial results have been and will continue to be adversely affected by the COVID-19 pandemic and could be adversely affected by another global pandemic or economic and geopolitical conditions, which could negatively affect our customers’ and partners’ businesses and levels of business activity, demand for our services as well as our and our customers’ and partners’ liquidity and access to capital.”

In France, Germany, Spain and Switzerland, we benefited from government programs for partial unemployment. The Company requested them only in the second quarter of 2020. No particular conditions were required apart from demonstrating that the Company was impacted by the COVID-19 pandemic. We were eligible for and received a total amount of $813,000.

We have taken the global pandemic into account in our estimates, notably those related to the non-current and current assets valuation, including goodwill.

We determined that the going concern assumption is still appropriate.

Components of Our Results of Operations

We have one primary business activity and operate in one operating and reportable segment.

Revenue

We sell space to display advertising online to advertising agencies, advertisers or DSPs, which we collectively refer to as our customers, and generate revenue when a user views an ad or clicks on it.

We price our advertising campaigns in a variety of ways. The most common pricing model in the industry is cost per thousand impressions whereby a customer pays per impression, which is deemed to have occurred when an ad is displayed to a user. However, due to our ability to optimize for results successfully leveraging our machine learning algorithms, we also offer guaranteed outcome pricing models such as cost per completed view, cost per click and cost per incremental visit. Customers are invoiced monthly or at the end of their campaign activities.

See “Critical Accounting Policies and Estimates—Revenue Recognition Criteria” for a description of our revenue recognition policies.

The COVID-19 pandemic impacted our business during the second quarter and the first month of the third quarter of 2020, as some customers decided to temporarily pause or reduce their campaigns with us. The COVID-19 pandemic headwind especially impacted our large customers in the travel and luxury sectors.

Cost of Revenue

Our cost of revenue includes inventory costs from our publisher contracts, personnel costs (such as salaries), bonuses and employee benefit costs, which are directly related to the operations of advertising campaigns. Cost of revenue also includes expenses to third-party hosting fees, data purchased from third parties and insight costs, which are all also directly related to the operations of advertising campaigns.

Operating Expenses

Technology and Development. Our technology and development expense consists primarily of personnel costs, including salaries, bonuses and employee benefits costs, third-party consultant costs associated with the ongoing development and maintenance of our platform, amortization of capitalized third-party software used in the development of our platform and allocated overhead. We allocate overhead such as information

 

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technology infrastructure, rent and occupancy charges based on headcount. Technology and development expenses are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization, which are recorded as capitalized software development costs included in other assets, non-current on our consolidated balance sheet. We amortize capitalized software development costs related to platform development.

We believe that continued investment in our platform is critical to attaining our strategic objectives and long-term growth. We therefore expect technology and development expenses to increase as we continue to invest in the development of our platform to support additional features and functions, increase the number of advertising and data inventory suppliers and ramp up the volume of advertising spending on our platform. Our development efforts also include additional platform functionality to support our international expansion. We also intend to invest in technology to further automate our business processes.

Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, bonuses, employee benefits costs and commission costs for our sales and marketing personnel. Sales and marketing expense also includes costs for market development programs, advertising, promotional and other marketing activities and allocated overhead. We allocate overhead such as information technology infrastructure, rent and occupancy charges based on headcount.

Our sales organization focuses on marketing our products to increase their adoption by existing and new customers. We are also focused on expanding our international business by growing our sales teams in countries in which we currently operate, as well as establishing a presence in additional countries. As a result, we expect sales and marketing expenses to increase in absolute dollars in future periods. Sales and marketing expense as a percentage of revenue may fluctuate from period-to-period based on revenue levels and the timing of our investments in our sales and marketing functions as these investments may vary in scope and scale over periods and are impacted by the revenue seasonality in our industry and business.

General and Administrative. Our general and administrative expenses consists primarily of personnel costs, including salaries, bonuses, and employee benefits costs associated with our executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional service fees, bad debt expense and allocated overhead. We allocate overhead such as information technology infrastructure, rent and occupancy charges based on headcount. We expect to continue to invest in corporate infrastructure and incur additional expenses associated with our transition to and operation as a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs associated with developing the requisite infrastructure required for internal controls. As a result, we expect general and administrative expenses to increase in absolute dollars in future periods.

Other Income (expense)

Other income (expense) primarily consists of exchange differences arising on the settlement or translation currency of monetary balance sheet items labeled in euros. We are exposed to changes in exchange rates primarily in the U.S., Canada, the United Kingdom, Japan, Korea, Singapore, Australia, Hong Kong, Argentina, Mexico and Brazil. At December 31, 2020, our exposure to foreign currency risk was centralized at parent company level. These exchange differences in euro are then translated into U.S. dollars (our reporting currency) according to the average euro/U.S. dollar exchange rate into local currency.

Provision for Income Taxes

The provision for income taxes consists primarily of income taxes from each of the countries of our operations. Our income tax provision may be significantly affected by changes to our estimates for tax in jurisdictions in which we operate and other estimates utilized in determining the global effective tax rate. Actual results may also differ from our estimates based on changes in economic conditions. Such changes could have a

 

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substantial impact on the income tax provision. We reevaluate the judgments surrounding our estimates and make adjustments, as appropriate, each reporting period.

Our effective tax rate differs from the statutory income tax rates due to local taxes, fair value adjustments and tax rate differences.

In 2020, three tax audits were closed in France, Germany and the United Kingdom with no major changes.

We did not identify any uncertain tax positions as of December 31, 2020.

Summary of Consolidated Quarterly Results

The following table sets forth our unaudited quarterly statements of operations data for each of the last eight quarters ended March 31, 2021. The information for each of these quarters has been prepared on the same basis as the audited annual consolidated financial statements included in this prospectus and, in the opinion of management, includes all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the results of operations for these periods. This data should be read in conjunction with our audited consolidated financial statements and related notes thereto included in this prospectus. These quarterly results of operations are not necessarily indicative of our future results of operations that may be expected for any future period.

 

(in thousands)

  Q1 2021     Q4 2020     Q3 2020     Q2 2020*     Q1 2020*     Q4 2019     Q3 2019     Q2 2019  

Revenue

  $ 126,592     $ 216,909     $ 136,944     $ 90,854     $ 95,566     $ 169,777     $ 118,900     $ 122,922  

Profit/(loss) for the period

  $ 28,023     $ 60,584     $ 33,819     $ 18,155     $ (1,045   $ 19,726     $ 15,361     $ 12,963  

Adjusted EBITDA

  $ 38,748     $ 94,753     $ 46,320     $ 26,326     $ 6,414     $ 43,429     $ 20,654     $ 20,512  

 

Adjusted EBITDA is a non-GAAP financial measure.

*

Q1 2020 revenue of $95,566 and Q2 2020 revenue of $90,854 were notably impacted by the COVID-19 pandemic. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance—The COVID-19 Pandemic” for additional information.

The following is a reconciliation of profit (loss) for the year/period to Adjusted EBITDA:

 

    Q1 2021     Q4 2020     Q3 2020     Q2 2020     Q1 2020     Q4 2019     Q3 2019     Q2 2019  
    (in thousands of USD)  

Revenue

    126,592       216,909       136,944       90,854       95,566       169,777       118,900       122,922  

Profit (loss) for the period

    28,023       60,584       33,819       18,155       (1,045     19,726       15,361       12,963  

Income tax expense

    (9,809     (25,778     (11,542     (7,162     (2,041     (11,278     (7,141     (5,963

Financial (cost) income

    690       (3,963     (56     19       (4,523     (1,308     2,566       (923

Change in value of contingent consideration

          (2,798                      

 
           

Retention bonus*

                                  (9,910            

Depreciation and amortization

    (1,605     (1,629     (903     (1,028     (895     (1,207     (718     (664

Adjusted EBITDA

    38,748       94,753       46,320       26,326       6,414       43,429       20,654       20,512  

 

*

In 2019, the Company accrued retention bonuses for certain managers (as provided for in the share purchase agreement relating to the acquisition of Teads S.A. by Altice International in 2017) that were paid in January 2020.

Results of Operations

The following tables set forth our consolidated results of operations and our consolidated results of operations as a percentage of revenue for the periods presented:

 

    Years Ended
December 31,
    Three Months Ended
March 31,
 
    2020     2019     Change     Change
(in %)
    2021     2020     Change     Change
(in %)
 

Revenue

  $ 540,273     $ 509,513     $ 30,760       6  %    $ 126,592     $ 95,566     $ 31,026       32  % 

Cost of revenue

  $ (253,138   $ (281,665   $ 28,527       (10 )%    $ (56,753   $ (60,128   $ 3,375       (6 )% 

 

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    Years Ended
December 31,
    Three Months Ended
March 31,
 
    2020     2019     Change     Change
(in %)
    2021     2020     Change     Change
(in %)
 

Technology and development expenses

  $ (16,037   $ (14,894   $ (1,143     8  %    $ (3,917   $ (3,875   $ (42     1  % 

Sales and marketing expenses

  $ (76,792   $ (104,230   $ 27,438       (26 )%    $ (21,722   $ (20,629   $ (1,093     5  % 

General and administrative expenses

  $ (24,949   $ (27,519   $ 2,570       (9 )%    $ (7,058   $ (5,415   $ (1,643     30  % 

Profit from operations

  $ 169,357     $ 81,205     $ 88,152       109   $ 37,142     $ 5,519     $ 31,623       573  % 

Changes in value of contingent consideration

  $ (2,798   $     $ (2,798                          

Financial (cost), income

  $ (8,523   $ 550     $ (9,073     $ 690     $ (4,523   $ 5,213    

Profit before tax

  $ 158,036     $ 81,755     $ 76,281       93   $ 37,832     $ 996     $ 36,836       3,698

Income tax expenses

  $ (46,523   $ (26,485   $ (20,038     $ (9,809   $ (2,041   $ (7,768     381

Profit (loss) for the year/period

  $ 111,513     $ 55,270     $ 56,243       102   $ 28,023     $ (1,045   $ 29,068       (2,782 )% 

Attributable to non-controlling interests

  $ (5   $ (1   $ (4     $ (3   $ (1   $ (2  

Attributable to owners of the Company

  $ 111,508     $ 55,269     $ 56,239       102   $ 28,027     $ (1,044   $ 29,071    

Earnings per share (in USD)

               

Basic

  $ 222.97     $ 110.52         $ 56.03     $ (2.09    

Diluted

  $ 175.12     $ 86.80         $ 44.00     $ (2.09    

Comparison of the Years Ended December 31, 2020 and 2019 and of the Three Months Ended March 31, 2021 and 2020

Revenue

 

     Years Ended
December 31,
    Three Months Ended
March 31,
 
     2020      2019      $ Change      Change
(in %)
    2021      2020      $ Change      Change
(in %)
 
     (in thousands, except percentages)  

Revenue

   $   540,273      $   509,513      $    30,760        6   $   126,592      $   95,566      $    31,026        32

Comparison of Three Months Ended March 31, 2021 and 2020. Revenue for the three months ended March 31, 2021 increased by $31 million, or 32%, compared to the three months ended March 31, 2020, confirming the strong performance of our business. In the first quarter of 2020, we were negatively impacted by the COVID-19 pandemic at the end of March, as some clients decided to temporarily pause or reduce their campaigns.

All geographic regions had double-digit revenue growth, excluding France and Germany, which were impacted by local lockdowns. In addition, we continued to reinforce our business with large customers.

Comparison of Year Ended December 31, 2020 and 2019. Revenue has been impacted by a decline in the overall advertising industry in the second quarter of 2020 and the first month of the third quarter of 2020 but this decline was offset during the rest of the year as evidenced by the increase in the revenue in the fourth quarter (double digit growth).

 

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Cost of Revenue

 

    Year Ended
December 31,
    Three Months Ended
March 31,
 
    2020     2019     $ Change     Change
(in %)
    2021     2020     $ Change     Change
(in %)
 
    (in thousands, except percentages)  

Cost of revenue

  $ (253,138   $ (281,665   $     28,527       (10 )%    $ (56,753   $ (60,128   $     3,375       (6 )% 

Comparison of Three Months Ended March 31, 2021 and 2020. Cost of revenue for the three months ended March 31, 2021 decreased by $3.4 million, or 6%, compared to the three months ended March 31, 2020. We continued to improve our efficiency in campaign delivery (platform and ad operations) and to renegotiate contracts with suppliers (including but not limited to publisher contracts and hosting contracts).

Comparison of Year Ended December 31, 2020 and 2019. Cost of revenue for the year ended December 31, 2020 decreased by $28.5 million, or 10%, compared to the year ended December 31, 2019. Lower global demand related to the COVID-19 pandemic-related lockdowns reduced our inventory purchase prices and optimization of our flow of demand allowed us to decrease the volume of non-monetized inventory.

Sales and Marketing Expenses

 

    Year Ended
December 31,
    Three Months Ended
March 31,
 
    2020     2019     $ Change     Change
(in %)
    2021     2020     $ Change     Change
(in %)
 
    (in thousands, except percentages)  

Sales and marketing expenses

  $ (76,792   $ (104,230   $     27,438       (26 )%    $ (21,722   $ (20,629   $     (1,093     5

Comparison of Three Months Ended March 31, 2021 and 2020. Sales and marketing expenses for the three months ended March 31, 2021 increased by $1.1 million, or 5%, compared to the three months ended March 31, 2020. This increase was mainly driven by headcount-related cost growth, in order to support expected business growth.

Comparison of Year Ended December 31, 2020 and 2019. Sales and marketing expenses for the year ended December 31, 2020 decreased by $27.4 million, or 26%, compared to the year ended December 31, 2019. This decrease mainly related to a reduction in headcount-related costs and discretionary spend measures on marketing and events as a result of the COVID-19 pandemic.

Technology and Development Expenses

 

    Year Ended
December 31,
    Three Months Ended
March 31,
 
    2020     2019     $ Change     Change
(in %)
    2021     2020     $ Change     Change
(in %)
 
    (in thousands, except percentages)  

Technology and development expenses

  $ (16,037   $ (14,894   $     (1,143     8   $ (3,917   $ (3,875   $     (0,042     1

Comparison of Three Months Ended March 31, 2021 and 2020. Technology and development expenses for the three months ended March 31 2021 increased by $0.042 million, or 1%, compared to the three months ended March 31, 2020. Headcount-related costs remained stable due to some offboarding, partly offset by new recruitments. Capitalized labor costs were stable for the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

 

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Comparison of Year Ended December 31, 2020 and 2019. Technology and development expenses for the year ended December 31, 2020 grew compared to the year ended December 31, 2019 due to an increase in the headcount-related costs. Capitalized labor costs increased by $2 million whereas the French research tax credit remained stable between 2020 and 2019. Technology and development expenses across both years are low because our use of developers and engineers based in Romania and the south of France results in lower costs than in many other locations.

General and Administrative Expenses

 

    Year Ended
December 31,
    Three Months Ended
March 31,
 
    2020     2019     $ Change     Change
(in %)
    2021     2020     $ Change     Change
(in %)
 
    (in thousands, except percentages)  

General and administrative expenses

  $ (24,949   $ (27,519   $     2,570       (9 )%    $ (7,058   $ (5,415   $     (1,643     30

Comparison of Three Months Ended March 31, 2021 and 2020. General and administrative expenses for the three months ended March 31, 2021 increased by $1.6 million, or 30%, compared to the three months ended March 31, 2020. This increase was mainly related to $1.4 million of withholding taxes paid, primarily in South America as well as in France.

Comparison of Year Ended December 31, 2020 and 2019. General and administrative expenses for the year ended December 31, 2020 decreased compared to the year ended December 31, 2019 mainly due to a reduction in headcount-related costs. The amount charged to allowance for doubtful accounts for the year ended December 31, 2020 was $1.5 million ($1.7 million for the year ended December 31, 2019).

Other Expense, Net

 

     Year Ended
December 31,
    Three Months Ended
March 31,
 
     2020            2019      $ Change     2021      2020     $ Change  
     (in thousands)  

Financial (cost), income

   $ (8,523      $ 550      $ (9,073   $ 690      $ (4,523   $     5,213  

Changes in value of contingent consideration

   $ (2,798             $ (2,798                   
  

 

 

      

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total other expense, net

   $ (11,321      $ 550      $ (11,871   $ 690      $ (4,523   $ 5,213  

Comparison of Three Months Ended March 31, 2021 and 2020. Financial (cost) income for the three months ended March 31, 2021 decreased compared to the three months ended March 31, 2020, primarily due to a decrease of $5.4 million in foreign exchange from the same period in the previous year. No hedging policy was set up for the three months ended March 31, 2021 and March 31, 2020 as some foreign currency exposures were covered by the Altice group. The Company benefited from a better exposure with some currencies for the three months ended March 31, 2021.

Comparison of Year Ended December 31, 2020 and 2019. Financial (cost) income for the year ended December 31, 2020 increased compared to the year ended December 31, 2019 primarily due to the increase of $7.7 million in foreign exchange from the prior year. No hedging policy was set up in 2020 as some foreign currency exposures were covered by the Altice group. In 2020, the other expenses, net, included the change in value of contingent consideration (payment of Buzzeff earn-out, a company acquired in 2019).

 

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Income Taxes Expenses

 

     Year Ended
December 31,
    Three Months Ended March
31,
 
     2020     2019     $ Change     2021     2020     $ Change  
     (in thousands)  

Income taxes expenses

   $ (46,523   $ (26,485   $ (20,038   $ (9,809   $ (2,041   $     (7,768

Comparison of Three Months Ended March 31, 2021 and 2020. Income tax expenses increased by $7,768 in the three months ended March 31, 2021 over the same period in the previous year. We had an effective income tax rate of 26% for the three months ended March 31, 2021, compared to an effective income tax rate of 205% in the three months ended March 31, 2020 (mainly resulting from the timing differences). Additionally, the income tax expenses increased during this period because we experienced an increase in profit as described below.

Comparison of Year Ended December 31, 2020 and 2019. Income tax expenses increased by $20,038 in the year ended December 31, 2020 over the previous year. We had an effective income tax rate of 29.4% in the year ended December 31, 2020 compared to an effective income tax rate of 32.4% in the year ended December 31, 2019. The lower effective tax rate in 2020 compared with 2019 is related to decrease in some local corporate taxes, corporate tax incentives (Japan) and change of country contribution in terms of operating profit (some countries having lower tax rates). Additionally, the income tax expenses increased during this period because we experienced an increase in profit as described below.

Profit (loss) for the Year/Period

 

     Year Ended
December 31,
     Three Months Ended
March 31,
 
     2020      2019      $ Change      2021      2020     $ Change  
     (in thousands)  

Profit (loss) for the year/period

   $ 111,513      $ 55,270      $     56,243      $ 28,023      $ (1,045   $     29,068  

Comparison of Three Months Ended March 31, 2021 and 2020. Our profit for the period increased from $(1,045) for the three months ended March 31, 2020 to $28,023 for the three months ended March 31, 2021. This increase was the result of the following factors: strong revenue growth, platform improvements, supplier cost control and investments in sales and marketing.

Comparison of Year Ended December 31, 2020 and 2019. Our profit for the year increased from $55,270 in 2019 to $111,513 in 2020 as a result of the factors discussed previously, as well as the increase in revenue that we experienced. The Company has taken initiatives to reduce its operating expenses in the field of marketing, travel and expenses, headcount-related costs and has renegotiated supplier contracts in order to alleviate the low increase in revenue.

Liquidity and Capital Resources

We continued to finance our operations and capital expenditures primarily through our utilization of cash generated from operations as well as one non-recourse factoring contract. As of March 31, 2021, we had cash, cash equivalents and marketable securities of $53.1 million. We did not pay any cash dividends on our ordinary shares for the three months ended March 31, 2021.

We believe our existing cash and cash flow from operations will be sufficient to meet our working capital requirements for at least the next 12 months. As an additional source of liquidity for working capital purposes as well as for potential acquisitions or strategic partnerships, we intend to enter into a revolving credit agreement with certain financial institutions that will provide for borrowings of up to $400 million. We have no

 

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current plans to draw on the facility when and if it is finalized. We have also entered into a customary overdraft facility with certain relationships banks for same day liquidity purposes for up to €40 million. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors.”

Commitments

The Group signed legally binding contracts with premium publishers with commitment for access to their inventory in 2021 and 2022. The total committed amount was $87,865 as of March 31, 2021 ($102,086 as at December 31, 2020). The amount decreased as a result of commitments spent during the first quarter. We did not face any challenge in the delivery of our commitments for the three months ended March 31, 2021.

Cash Flows

The following table summarizes our cash flows for the periods presented:

 

     Year Ended
December 31,
     Three Months Ended
March 31,
 
     2020      2019      2021      2020  
     (in thousands)  

Cash flows provided by operating activities

   $ 110,194      $ 50,821      $ 32,021      $ 10,716  

Cash flows used in investing activities

   $ (70,429    $ (39,915    $ (34,176    $ (10,012

Cash flows used in financing activities

   $ (4,600    $ (4,886    $ (1,942    $ (1,598
  

 

 

    

 

 

    

 

 

    

 

 

 

Increase (decrease) in cash

   $ 35,165      $ 6,022      $ (4,096    $ (894
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Activities

Our cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our customers and related payments to our suppliers of advertising inventory and data, as well as our investment in personnel to support the anticipated growth of our business. Cash flows from operating activities have been affected by changes in our working capital, particularly changes in accounts receivable and accounts payable due to the seasonality of our business (strong contribution of the fourth quarter). Thus, our collection and payment cycles can vary from period-to-period.

For the three months ended March 31, 2021, cash from operating activities of $32.0 million net resulted primarily from net profit for the period of $28 million net of changes in our working capital. The net change in working capital was primarily related to a decrease in accounts receivable and a decrease in accounts payable. The change in accounts receivable was primarily due to the change in the contribution of our revenue channels (higher portion of Teads Ad Manager at 70% for the three months ended March 31, 2021 compared to 65% in 2020) and the change in accounts payable was primarily due to the timing of payments to suppliers.

For the year ended December 31, 2020, cash from operating activities of $110 million net resulted primarily from our profit for the year of $111.5 million net of negative changes in our working capital. The net change in working capital was primarily related to an increase in accounts receivable and a decrease in accounts payable. The change in accounts receivable was primarily due to the change in the contribution of our revenue channels and the change in accounts payable was primarily due to the timing of payments to suppliers. The average days sales outstanding (“DSO”) varies depending on the revenue channel with Teads Ad Manager activity having higher DSO compared to third-party DSPs. Teads Ad Manager activity’s contribution to revenue increased from 57% in 2019 to 65% in 2020, leading to higher accounts receivable.

Investing Activities

Our primary investing activities have consisted of the cash management agreement with Altice Teads S.A., entered into with several of our subsidiaries on September 23, 2019, with effect as of April 1, 2018, with

 

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several other subsidiaries joining subsequently, to establish and maintain a cash management system to avoid retaining costly financial fixed assets and to promote the coordinated and optimal use of surplus cash or to cover cash requirements globally among the signatories for an unlimited period of time.

For the periods ended March 31, 2021 and March 31, 2020, the amounts lent to Altice Teads S.A. by the Teads S.A. subsidiaries were $32 million and $7.5 million, respectively.

For the years ended December 31, 2020 and December 31, 2019, the amounts lent to Altice Teads S.A. by the Teads S.A. subsidiaries were $64 million and $32 million, respectively.

This agreement is expected to be terminated prior to the closing of this offering. See “Certain Relationships and Related Party Transactions—Ongoing Relationship with the Altice Group and the Altice USA, Inc. Group.”

Financing Activities

Our financing activities consisted primarily of lease payments classified as repayment of debt under IFRS 16 Leases.

In the three months ended March 31, 2021, cash used by financing activities of $1.6 million was used for lease payments classified as repayment of debt. In the year ended December 31, 2020, cash used by financing activities of $2.9 million was used for lease payments classified as repayment of debt.

In the three months ended March 31, 2020, cash used by financing activities of $1.2 million was used for lease payments classified as repayment of debt. In the year ended December 31, 2019, cash used by financing activities of $4.6 million was used for lease payments classified as repayment of debt.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with IFRS GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, and the assumptions used in the income taxes have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

Revenue Recognition Criteria

We recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and determine revenue recognition using the following steps:

 

   

Identification of a contract with a customer;

 

   

Identification of the performance obligations in the contract;

 

   

Determination of the transaction price;

 

   

Allocation of the transaction price to the performance obligations in the contract; and

 

   

Recognition of revenue when or as the performance obligations are satisfied.

 

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We are deemed to be the principal when we control our services prior to being transferred to our customers. Indications of control include our responsibility for fulfilling service, inventory risk from purchases from our publishers and our pricing discretion. When we act as the principal, revenue is presented on a gross basis.

We are deemed an agent when we do not control the services before they are transferred to buyers of the advertising inventory, which is the case when publishers sell the inventory directly to their customers. We do not control the advertising inventory and we do control the pricing. When we act as the agent, revenue is presented on a net basis in the statement of profit and loss.

We record deferred revenues when cash payments are received or due in advance of our performance obligation, excluding any amounts presented as a receivable.

For some of our customers, we provide incentives in the form of cash or options to acquire additional services based on the customers achieving certain volumes or monetary thresholds, which are treated as variable consideration. Such incentives are generally recognized in revenue over time and our estimates are based on a combination of contractual agreements, historical award experience and our best judgement and are updated on a periodic basis. These discounts can range from 5% to 25% of our customers’ net spend.

Practical expedients

Although we have three types of revenue streams, they all share the same nature, timing and uncertainties. The performance obligations of all three revenue streams are satisfied over time and they all are linked directly to the advertisement being done. Our chief operating decision-maker (“CODM”) is not reviewing these different streams separately and therefore we have not disaggregated the revenue presentation by revenue stream but has shown the disaggregation by geography.

We do not adjust the promised amount of consideration for the effects of a significant financing component because at contract inception, the period between when we provide services to our clients and when our customers pay for the service will be one year or less.

Income Taxes

Our income tax provision may be significantly affected by changes to our estimates for tax in jurisdictions in which we operate and other estimates utilized in determining the global effective tax rate. Actual results may also differ from our estimate based on changes in economic conditions. Such changes could have a substantial impact on the income tax provision. We reevaluate the judgments surrounding our estimates and make adjustments, as appropriate, each reporting period.

Deferred income tax assets and liabilities are determined based upon the net effects of the differences between the consolidated financial statements carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized. The Company recognizes interest and penalties accrued related to its uncertain tax positions in its income tax provision in the accompanying consolidated statement of operations.

There have been no material changes to our critical accounting policies and estimates from the information provided in our annual consolidated financial statements.

 

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JOBS Act Accounting Election

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. We currently prepare our consolidated financial statements in accordance with IFRS as issued by the IASB, so we are unable to make use of the extended transition period. We will comply with new or revised accounting standards on or before the relevant dates on which adoption of such standards is required by the IASB.

Recent Accounting Pronouncements

A list of recent relevant accounting pronouncements is included in note 2 “Significant accounting policies” of our consolidated financial statements.

Quantitative and Qualitative Disclosure about Market Risk

We have operations both within the U.S. and internationally, and we are exposed to market risks in the ordinary course of our business. These risks include primarily foreign currency exchange and inflation risks.

Foreign Currency Exchange Risk

Our functional currency, which is the currency that best reflects the economic environment in which the subsidiaries of Teads S.A. operate and conduct their transactions, is separately determined for each of these subsidiaries and is used to measure their financial position and operating results. Our reporting currency is the U.S. dollar.

This risk is linked to the Group’s activities outside of the euro zone, which increased significantly within the last two years with the development of the North and South American, and Asia businesses. In addition to the international expansion, the development of the programmatic business (booked in France) increased the exposure to USD currency.

At December 31, 2020:

 

   

28% of the balance sheet total was denominated in a currency other than the euro (27% in 2019);

 

   

33% of the total revenue was denominated in a currency other than the euro (27% in 2019).

No foreign currency hedging was in place in 2019 and 2020.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

 

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Founders’ Letter

Letter from Pierre Chappaz, Founder and Bertrand Quesada, Co-Founder and Chief Executive Officer

When we met some 15 years ago, Bertrand and I both had had a successful internet venture experience and we were both looking for a new entrepreneurial challenge.

Ever since I was a child, I have been passionate about the media. I was back then, and still am today, a voracious reader of several newspapers and magazines on a daily basis. As the Internet began to revolutionize the access to publisher content, I found myself reading more and more, and was inspired to create new tools to make it easier to discover interesting content in the myriad of online pages available.

Bertrand was more passionate about the advertising ecosystem and the exciting new possibilities offered by the Web. He was working hard on creating new ways for connecting brands with their customers.

I was more naturally inclined towards product and technology, while Bertrand’s personal inclination was more towards the sales, business development and operations side of the business.

During our first meeting in 2005, we both felt an immediate chemistry and quickly realized how complementary we were!

Naturally, our conversation evolved around the combination of media and advertising. We spent countless hours discussing publisher and advertising business models, how advertising should fund journalism and allow users to access content for free. And we decided to work together.

Teads, which was not yet known as Teads, was born.

The subsequent years were years of innovation, expansion, team building, trial and error and successes and failures (more successes though), and we found ourselves running a nice little advertising business in Europe. Until one day, we realized video advertising was going to radically change the game!

We began testing various ways to distribute video ads on publisher pages. Unlike many existing solutions, we were adamant about providing a respectful experience to consumers. We strongly believed this was a critical component to attracting the best publishers and advertisers to a new form of advertising online.

In 2012, our elegant solution was born: video ads placed between two paragraphs of an article, sound off by default, to respect the consumer. We call it the inRead, And this innovation by Teads started a revolution.

Before the inRead, very few editorial publishers were generating revenue with video ads, because ads had to be placed in front of video content. This video content was costly to produce. With our innovation, we allowed publishers to monetize their existing article pages with high value video ads instead of lower revenue display.

Teads’ growth started to accelerate as we entered the teenage years of the business. We became a global company with teams on both sides of the Atlantic and across APAC, quickly partnering with prestigious publishers all over the world, and attracting agencies and brands who wanted to run their video campaigns in a premium context and at scale. We raised more capital to accelerate even further.

We quickly understood that if we wanted to leverage this opportunity, we needed to go one (big) step further. The inherent weakness of the media ecosystem is that it is highly fragmented, making it complicated for advertisers and agencies to run their campaigns. The missing piece was simply a platform, an end-to-end programmatic advertising platform uniting the media and leveraging their capabilities thanks to the most advanced technologies, including machine learning.

 

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Our early vision was ambitious: we wanted to connect leading brands and their agencies with the most iconic publishers all over the planet. And to do so, we needed to build a buying interface, powerful data and targeting capabilities, creative optimization features, a full-stack publisher monetization platform, a solid infrastructure capable of handling massive traffic, and to inject machine learning everywhere.

It took us many years to deliver on our vision. Our end-to-end platform, which we like to call The Global Media Platform, has now changed the game once again. It brings together the world’s top publishers into a powerful advertising platform, with a massive audience of 1.9 billion monthly unique users around the world. A platform capable of providing the best return on investment to brands and agencies, and the highest level of monetization to media owners. A platform which radically simplifies the complexity of the fragmented adtech ecosystem. A platform capable of offering an attractive alternative to the walled gardens.

The timing of this next stage in our journey is perfect.

Digital’s role in the advertising ecosystem has accelerated recently, but with an increased focus on platforms who are responsible in their methodology, especially when it comes to data and privacy. Our robust technology and integration with the world’s best publishers not only guarantees quality but also allows us to chart our own future and not be beholden to regulatory changes or industry trends.

Such innovation and trust has built a foundation on which Teads can grow, matching the ambition we have for becoming the number one adtech player on the open web.

15 years after we started working together, we are proud to be a positive force in today’s media ecosystem. We are proud to be a trusted partner for the majority of the most premium publishers all over the world, and for the leading brands and their agencies that we help reaching their marketing objectives through planning, data, targeting and also creative optimization, measurement, and insights.

Advertising exists to help our economies generate business. We are proud to be a business partner for so many of the top companies in the world.

And with the listing of our company, we have the feeling that we’re just getting started!

 

Pierre Chappaz

Bertrand Quesada

 

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BUSINESS

Our Mission

Our mission is to provide peace of mind and exceptional results to advertisers, an engaging and respectful experience to consumers and premium monetization for media owners.

Overview

We operate a leading, cloud-based, end-to-end technology platform that enables programmatic digital advertising for a global, curated ecosystem of quality advertisers and their agencies and quality publishers. We operate in the Open Web outside of the Walled Gardens. As an end-to-end solution, our platform consists of buy-side, sell-side, creative, data and AI optimization modules. As a result, we have built deep partnerships with both the demand and supply sides of digital advertising. For advertisers and their agencies, our platform offers a single access point to buy the inventory of many of the world’s best publishers. Through exclusive partnerships with these premium publishers, we enable customers to reach 1.9 billion unique monthly users (as of April 2021), while improving the efficiency, quality and cost of digital ad transactions. For about 3,100 publishers, we are a trusted monetization partner, providing the technology required to monetize their most valuable ad inventory programmatically. By connecting both sides through our integrated platform, known as the Teads Global Media Platform, we solve the digital programmatic advertising industry’s most significant problems related to value chain fragmentation, inefficient digital advertising pricing and quality and scale of inventory. We refer to the ecosystem enabled by Teads Global Media Platform as the Curated Internet.

Our innovative and comprehensive set of products have been trusted by publishers on the Open Web for almost a decade. In 2012, we pioneered an industry-defining video advertising format known as outstream, which is embedded in-article, specifically in between two paragraphs of editorial text. This invention immediately solved one of the biggest problems in digital advertising related to the lack of quality video inventory. Our platform is also capable of delivering display ads, which are the preferred advertising format for performance-oriented campaigns, as well as other web and app formats.

We offer advertisers and their agencies access to high-quality inventory at scale. Quality inventory, especially video inventory, is in short supply in digital advertising so our Curated Internet solves a major problem for leading customers. Advertisers and their agencies can work directly with us through our self-serve buying interface, Teads Ad Manager, or through third-party DSPs. Regardless of how or where advertisers transact, they have access to our quality inventory sources on behalf of our publisher partners. Teads Ad Manager has the advantage of leveraging our machine learning prediction models, which are focused specifically on our publisher partners and our in-article placements. We use our predictive machine learning algorithms to process large volumes of data based on thousands of campaigns to deliver superior outcomes for customers. As a result, we believe we can offer significant cost efficiencies and greater ROI to agencies and advertisers who access our publisher partners’ inventory directly through Teads Ad Manager. On average in 2020, Teads Ad Manager delivered 24% lower CPMs, higher results on customers’ KPIs (including more than doubling the click-through rate and higher completion rate and viewability), and 100% more scale compared to DSPs.

We enable publishers to monetize their digital advertising inventory through our Teads for Publishers platform, which provides them with direct sale capabilities and is directly connected to our buy side interface, Teads Ad Manager. This full monetization platform is comprised of our proprietary SSP, ad exchange, ad server, video player, ad quality management, a comprehensive self-serve interface, full set of ad formats and audience and other targeting capabilities. As a result, we are deeply embedded with our publisher partners, who rely upon our technology platform to monetize their most valuable sources of ad inventory. Our platform allows us to bring premium monetization to publishers. For example, with our top tier publishers, we deliver mostly premium video demand with an average of $12.00 CPMs compared to typical display demand that other SSPs deliver at an average of $2.31 CPMs. We believe this drives publisher stickiness and retention. For the year ended December 31, 2020, our Publisher Retention Rate was approximately 99%. We operate exclusive partnerships

 

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with over 80% of our publishers for their in-article video inventory, demonstrating the value we deliver. Our longstanding publisher partnerships are aggregated into a highly curated version of the Open Web that includes many of the world’s leading publishers like The BBC, ESPN, Meredith, The Guardian, Bloomberg, The Washington Post, Vogue, L’Equipe, El Mundo, Der Spiegel, South China Morning Post and El Universal. Our Curated Internet reaches 1.9 billion unique monthly users worldwide (as of April 2021) and presents a significant value proposition to advertisers and agencies. As of March 31, 2021, we had about 3,100 editorial publishers on our platform, representing more than 15,000 web and app properties that provide access to more than one trillion ad opportunities every year.

Our customers and publisher partners both have access to Teads Audiences, our suite of audience targeting features that deliver accuracy and scale in audience targeting through utilizing first-, second- and third-party data. They also have access to Teads Studio, our creative platform that provides a self-service creative production tool and dynamic creative optimization capabilities.

We define our total addressable market as the global digital advertising market which IDC estimated at $319 billion as of 2020. The global digital advertising market is expected to grow at a 7.5% CAGR from 2020 through 2024.

We operate an efficient go-to-market strategy. Our primary customer, in most cases, is the advertising agency, which can represent up to hundreds of advertisers, providing us an efficient point of contact to serve many advertisers. For larger advertisers, we have a dedicated team that advises on utilizing our services for various advertising needs, including leveraging our creative, data and research solutions. In these instances, we work very collaboratively with such advertisers’ agencies. We also deploy a team exclusively focused on partnerships with DSPs. We work with leading global advertisers across various verticals such as technology, automotive, CPG, finance and entertainment. Our number of customers, defined as customers who spent at least $1,000 in the trailing 12-month period, grew to approximately 2,000 as of December 31, 2020. 91% and 94% of our total revenue in the years ended December 31, 2019 and December 31, 2020 came from customers that contributed more than $1,000 in trailing 12-month revenue. Our Gross Customer Retention Rate was 94% for each of the years ended December 31, 2019 and December 31, 2020.

We have a powerful combination of scale, growth and profitability. Our revenue grew from $509.5 million for the year ended December 31, 2019 to $540.3 million for the year ended December 31, 2020, representing a year-over-year growth rate of 6%, despite a negative impact of the COVID-19 pandemic in the first half of 2020, and from $95.6 million for the three months ended March 31, 2020 to $126.6 million for the three months ended March 31, 2021, representing a period-over-period growth rate of 32%. Our profit for the year ended December 31, 2020 was $111.5 million, representing a net profit margin of 20.6%, and $28.0 million for the three months ended March 31, 2021, representing a net profit margin of 22.1%. We generated Adjusted EBITDA* of $173.8 million for the year ended December 31, 2020, representing an Adjusted EBITDA margin of 32.2%, and $38.7 million for the three months ended March 31, 2021, representing an Adjusted EBITDA margin of 31%. For more information on the nature of the impact of the COVID-19 pandemic on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance—The COVID-19 Pandemic”.

Our Position Within the Industry

The digital advertising market is bifurcated between the Walled Gardens and the Open Web. While the Walled Gardens have grown their market share in recent years, accounting for an estimated 58% of total global digital advertising in the year ended December 31, 2020 according to eMarketer, advertisers have become increasingly dissatisfied with these platforms. Walled Gardens limit advertisers’ ability to access and use data outside of their platforms and, due to their content being user-generated, make it difficult for advertisers to control what content their ads are placed next to, including fake news and inciteful content. As a recent example, more than

 

* 

Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see “Summary Historical Consolidated Financial and Other Data.”

 

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1,000 advertisers on a social media platform, including five of its top 20 advertisers based on spend in the year ended December 31, 2019, announced their intention to at least temporarily pause ad spending in the year ended December 31, 2020 in response to the platform’s handling of certain policies related to user-generated content. Moreover, publishers are concerned that the Walled Gardens prioritize monetizing their owned and operated inventory over third-party inventory. Finally, the Walled Gardens achieve low user attention to ads placed in their user-generated content when compared to ads placed within professionally produced editorial content from quality publishers. The Open Web offers advertisers greater transparency and control over their data and the placement of

where their ads appear, but it presents its own challenges because it is a massive ecosystem with millions of independent publishers, many of which are small and less sophisticated, creating concerns related to the quality of ad environments and potential for fraud. Additionally, due to its fragmented nature, agencies and advertisers in the Open Web must deal with a complex value chain, creating interoperability issues and inefficiencies.

We offer to advertisers what we believe to be the best alternative to the Walled Gardens by uniting the world’s best publishers in a Curated Internet and connecting them to advertisers in a single end-to-end platform. We resolve the content quality issues that plagued the Walled Gardens and much of the Open Web, lack of control of user data within the Walled Gardens, potential for fraud in the Open Web and value chain complexity and inefficiencies in the Open Web.

Previously advertisers had access to limited premium video inventory because most quality web publishers lacked video content in which to integrate a video ad. YouTube was the only platform with scale video inventory; however, advertisers demanded alternatives in response to many issues stemming from the user-generated nature of YouTube’s video content. The outstream video ad product pioneered by us provides publishers with an increased supply of high-quality video advertising. Because outstream ads are placed in the heart of premium editorial content, they generate much higher engagement from users than ads in other formats, generating better results for advertisers and publishers alike.

Teads Global Media Platform seamlessly connects supply and demand

 

LOGO

The digital advertising market is in the midst of adapting to ongoing trends with regard to consumer privacy and restrictions on the use of personal data to target users. Google has announced that Chrome will block third-party cookies by the end of 2022, together with other changing regulatory and industry practices such as

 

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GDPR and Apple’s Identifier for Advertisers (“IDFA”). We believe we are well-positioned to face these changes. Specifically, we believe our scale and deep integrations with our publisher partners will enable us to access significant amounts of contextual data, which does not rely on personal identifiers. Because we know what users are viewing on the page through advanced semantic analysis, we can target them based on what they are reading without using cookies to identify who they are. Google is rolling out new technology like the Federated Learning of Cohorts application programming interface (“FLoC”), which is designed to gather information on groups of similar users rather than singling out individuals. We expect to have direct access to such data because we have our code on the webpages of our publisher partners, enabling us to offer timely, innovative solutions to our agency and advertiser customers.

Our Industry

The media industry continues to shift to digital formats driven by technological advancements and changes in consumer behavior. The proliferation of mobile devices, social networks and digital content is increasing the amount of time that consumers spend online, which is driving advertisers to reallocate budgets to digital channels. IDC estimated that the global digital advertising market in 2020 was $319 billion, growing at a 10.7% CAGR since 2017. They expect this market to grow to $425 billion by 2024 at a CAGR of 7.5% from 2020 through 2024. We believe that the digital advertising market is similar to economies experiencing an industrial revolution, driven by rapid growth but fraught with issues that must be addressed in order to sustain longer-term growth, including:

 

   

A complex and inefficient value chain;

 

   

Ad fraud;

 

   

Ad viewability;

 

   

Context quality;

 

   

Privacy protection;

 

   

User-generated content and misinformation; and

 

   

Regulatory changes.

The Digital Advertising Market is Driven by Several Important Trends

Growth in Digital Advertising Inventory in Response to Greater Digital Content. Many traditional media outlets and publishers have shifted content to digital formats and away from traditional formats like print. The COVID-19 pandemic has also accelerated consumers’ time spent online with a range of digital media activities, further driving the shift to digital content formats. Premium content, most of which is advertising supported, continues to be in demand by users. As users increasingly allocate greater time to digital formats, publishers will continue to invest in premium digital content creation and digital advertising inventory will therefore also increase. This increased inventory will need to be monetized in a manner that satisfies publishers’ and advertisers’ objectives with respect to quality and safe inventory and ads.

Ad Spending Consolidating on Fewer Platforms. As spend on digital formats increases as a percent of overall advertising budgets, agencies and advertisers are demanding improved transparency and control over their entire digital advertising supply chain. Advertisers demand details on the type of inventory purchased and the content appearing adjacent to their ads to avoid fraudulent inventory purchases and ad placement next to content that harms their brand. To achieve this, advertisers have increasingly established direct relationships with vendors in the digital advertising ecosystem who have clear practices and the necessary technical capabilities. This has driven a larger portion of spend to consolidate into fewer, more transparent technology platforms, particularly on platforms that have higher quality inventory, such as Teads.

 

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Synthesis of Scale Data Sets Improves Online Targeting and Campaign Decisioning. Digital media and advertising generates a significant volume of data allowing for better ad targeting and campaign decisioning. This data includes indirect customer information about interests and intent, contextual data such as the content of what consumers read, their device, the time/date and the consumers’ behavior in response to ads, such as view and clickthrough rates. The collection of such data, and the ability of advertising technology to synthesize and analyze it provides immense value to advertisers, especially with regard to enabling audience targeting and campaign decisioning. Audience targeting is of the utmost importance to advertisers because it allows them to achieve significantly higher returns with digital advertisements that are delivered on a personalized basis. Additionally, advertising technology companies ingest and analyze data to build algorithms for more effective campaign decisioning, such as deciding which ad to show in which context. Market participants need an effective data science strategy and the capability to efficiently analyze the massive amount of data in real-time to build effective targeting and campaign decisioning algorithms. At the heart of our platform is our predictive machine learning, which leverages data in order to achieve these objectives.

Growing Advertiser Appetite for Guaranteed Outcomes. In digital advertising, the most common pricing model is for an advertiser to pay for an ad impression the moment the ad is displayed on a publisher’s page when the user loads the page. Advertisers are increasingly requesting alternative pricing models where they only pay when a result is generated, such as when a user views an ad for a particular amount of time or when a user clicks on an ad and arrives at a landing page. From the beginning, we have been at the forefront of providing guaranteed outcome pricing models because our predictive machine learning algorithms can predict an outcome with a higher probability of accuracy, giving us confidence in this approach. We continue to expand our guaranteed outcomes pricing options in line with the growing demand from advertisers.

Privacy Protection. The regulatory landscape for digital advertising is increasingly complex and constantly evolving. There exists a growing focus on how consumer data is leveraged to target ads, resulting in a growing number of privacy laws and regulations globally and changes in policies by Internet browsers. The European Union has issued the GDPR and California has issued the CCPA, both of which impact to a substantial degree the digital advertising industry. The industry is also self-regulating. The IDFA, which provides information about a person’s online behavior used for evaluating advertising effectiveness and setting up targeting, is transitioning to opt-in. In addition to an industry-wide transition away from cookies for targeting and tracking purposes, in January 2020, Google announced plans to phase out support for third-party cookies in the Chrome web browser within two years. These trends are driving the need for platforms that can improve targeting with their own data and technology rather than cookies. Our technology relies largely on cookieless data signals such as contextual data (i.e., what the user is viewing) as opposed to behavioral targeting (i.e., demographic and other details about the user), which we believe positions us favorably to adapt to new regulatory and industry trends.

Our Market Opportunity

Per IDC, the global advertising market was estimated to be $682 billion in 2020 and is expected to grow at a CAGR of 3.3% from 2020 through 2024. As consumers have spent increasingly more time online with the rise of mobile devices, social media platforms and the proliferation of online content, the global digital advertising market has experienced rapid growth. Digital advertising growth is expected to outpace the overall advertising market as digital continues to take market share from traditional media like print and radio. Of the global advertising market, $319 billion, or 47% was attributed to global digital advertising spend. Digital advertising has increased from 36% of total advertising in 2017 and is expected to grow to 55% of total advertising by 2024. Per IDC, in the U.S., digital advertising was estimated to be $128 billion in 2020 and is expected to grow at a 7.4% CAGR from 2020 through 2024.

We believe our business is positioned to capture this growth opportunity as more ad dollars are allocated to digital. Specifically, we compete for global digital advertising budgets allocated to display and video advertising formats. We define our addressable market as global digital advertising spending, which was

 

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estimated at $319 billion in 2020 and is expected to grow at a 7.5% CAGR from 2020 through 2024. We compete with larger advertising platforms like Facebook and Google’s YouTube as well as various competitors who serve the Open Web. Our platform connects advertisers to a highly curated segment of the Open Web that is composed of high-quality publishers and scale inventory. By addressing key issues related to the quality of inventory and ROI, we believe we are helping drive relevance and advertising spend to the Open Web. Although advertising on the Walled Gardens represents a significant amount of global digital ad spend, advertisers are increasingly raising concerns about the lack of transparency and accountability of user-generated content found on these platforms. eMarketer expects that more marketers will restrict advertising spending on Walled Gardens and social media platforms due to brand safety and ethical concerns. According to a survey from eMarketer, the lack of transparency from Walled Gardens is likely to result in decreased advertiser spending in those channels going forward. In a survey of U.S. digital media experts conducted by Integral Ad Science in October 2020, 63% of survey participants expect that insufficient transparency will affect Facebook. Advertisers also cite frustrations about their limited ability to access and use their data outside of Walled Gardens. In contrast, the Open Web allows for access to high-quality, editorial content in an environment where consumers are curious and engaged. As advertisers recognize these differences and as we curate an improved Open Web experience, we believe demand for our solutions will continue to grow.

Within the global digital advertising market, there are several segments that are driving above-market growth for our business:

Shift to Programmatic. Programmatic advertising is the automated buying and selling of digital ads, optimizing performance and pricing through real-time signals. Programmatic advertising has drastically improved the efficiency of buying and selling ads and driven increased adoption of digital advertising. According to IDC, global programmatic digital ad spending was $142 billion in 2020 and is expected to grow at a 10% CAGR from 2020 through 2024. This does not include search advertising. Within programmatic advertising, programmatic digital video advertising spending was estimated at $53 billion in 2020 and is expected to grow at a 12.6% CAGR from 2020 through 2024. Digital advertisers have embraced programmatic advertising, which improves the optimization of both performance and pricing through real-time indicators. Currently, display and video programmatic advertising represents 45% of the total digital advertising market and is expected to increase to 49% by 2024. 100% of our business is programmatic.

Mobile Is the Dominant Format in Digital Advertising. For consumers, mobile is now the primary and preferred device format for consuming digital content and making purchases. According to Statista, there are currently 14 billion mobile devices in use globally, and this is expected to expand at a 6.0% CAGR from 2020 through 2024 to an estimated 17.7 billion devices. As global mobile device growth explodes, facilitated by improved devices and connectivity, growth in mobile advertising is expected to continue. The digital mobile advertising market has grown at a 26% CAGR since 2017 to $197 billion in 2020 according to IDC and is expected to grow at a 12.7% CAGR going forward from 2020 through 2024. Mobile currently contributes 62% of digital advertising but is expected to represent 75% in 2024. Display advertising dollars continue to shift from desktop to mobile with more than 70% of digital display ad dollars flowing to mobile ads according to eMarketer. Approximately 80% of our business is mobile. Mobile also dominates spending within the subcategory of video with its share hovering just under two-thirds of the total according to eMarketer. We believe we are well-positioned to gain from the continual growth of the mobile advertising opportunity because most of our advertising inventory is on mobile devices and in-article placement is especially prominent on mobile devices, taking up a bigger proportion of the screen than the same ad on desktop screens.

Popularity and Increasing Usage of Video Ad Formats. Advertisers continue to see greater value in, and ROI from, video advertising, and are shifting their budget allocation from traditional formats to video formats. According to IDC, in 2020 video advertising was $57 billion of the overall digital advertising market, or 18%. This is expected to increase to 20% of the total digital market by 2024 and grow at an 11% CAGR, which outpaces the market. The popularity of video advertising has only been increased by the COVID-19 pandemic as video helps consumers connect and understand products better virtually. We believe our outstream video ad

 

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format has provided the industry with quality video advertising at scale that was previously lacking. CTV, although relatively nascent, is a growing piece of the digital video ad market as consumers increasingly shift from linear to streaming video content; the market was estimated to be approximately $8 billion in 2020, per IDC. Approximately 60% of our business is video.

Performance Advertising Growth. Performance advertising, as opposed to brand advertising, is used to achieve measurable results, including retaining an audience, generating leads, boosting sales or increasing loyalty, as a direct and immediate result of users seeing and interacting with an ad. Performance advertising can increase the immediate effectiveness of a marketing budget, maximize ROI and allow for more precise measurement of results. In response to tightening budgets during the COVID-19 pandemic, many advertisers shifted their budget allocation to performance advertising, which offered more direct and immediate results. According to IDC, the global performance advertising market was estimated to be $176 billion in 2020 and is expected to grow at an 8.1% CAGR from 2020 through 2024. Today, companies rely on a healthy mix of performance and brand advertising and we offer solutions for both.

Who We Are

Teads S.A. was founded approximately 15 years ago by Pierre Chappaz and Bertrand Quesada. Since then, we have grown to approximately 820 employees as of March 31, 2021 with 36 offices across 23 countries.

We are an innovative company that has enjoyed robust growth since inception. We invented the outstream video advertising format and we believe we are the market leader for in-article video advertising, which has driven our sustained growth. Inserting videos in between two paragraphs of editorial text created a new video ad product that quickly grew to represent a scale source of video advertising inventory and a new opportunity to monetize. Our innovation enabled us to quickly secure exclusive partnerships with many of the world’s leading publishers, which in turn allowed us to build advertising solutions that leading brands and their agencies depend upon. Our exclusive and longstanding publisher partnerships allowed us to build what we believe is the largest global network of premium publishers, allowing us to attract leading advertisers globally who deliver scaled, premium demand to our publisher partners around the globe. Our full-stack, end-to-end technology platform is used by both customers and publishers and bridges either end of the market. Our differentiated two-sided network represents a high barrier to entry while providing a dependable stream of recurring revenue.

We believe our differentiated approach has generated value for our customers, leading to numerous awards, including:

 

   

Best Brand Positioning/Awareness Campaigns

IAB Mixx Europe, 2020

 

   

Best Video Ad Tech Innovation

DIGIDAY Global, 2020

 

   

Best Use of Digital

Festival of Media LATAM 2020

 

   

Best Places to Work

Inc’s Magazine 2017

Our Core Values

Our culture is defined by a clear set of ten core values, each of which is critical to our success. We believe that these values not only guide our business and define our brand, but also deliver real financial and operational benefits for us, our customers, our publishers partners, our employees and our shareholders:

 

  1.

Innovation: We innovate by creating advertising experiences that respect the user experience and benefit publishers, brands and agencies.

 

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  2.

Hard Work: Our main competitors are the digital advertising leaders such as YouTube and Facebook. The only way to win is by working twice as hard as them.

 

  3.

Elegance: We aim to deliver the most elegant solutions in the advertising sector, across the world’s most prestigious publishers.

 

  4.

Entrepreneurship: We are a fast growing company built with entrepreneurship at its heart. Everybody at Teads is listened to, respected and rewarded for their contributions.

 

  5.

Passion: We are passionate about technology and advertising, and we believe we can build the most successful independent advertising company in the world.

 

  6.

Trust: We put a lot of trust in our team. We motivate everyone by giving them responsibilities and trusting them to deliver. Trusting each other makes us stronger.

 

  7.

We Love Media: We aim to be a positive force in the media ecosystem, promoting a clean advertising environment through viewability, brand safety and fraud-free inventory.

 

  8.

Social Purpose: In addition to being a positive force in the media industry, we believe in fostering a just and equitable environment at work and in society at large for people of all backgrounds.

 

  9.

Dedication to Customers: We are obsessed with making our customers happy. We work hard to deliver the best technology and the best customer service every single day.

 

  10.

Playing to Win: We consider our business a game that we love to play, and a game we plan to win. And we have fun along the way.

Our Core Strengths

Quality. We are known in the industry as “the” quality provider and quality defines who we are. We invented a solution that provides a quality user experience for consumers on quality publishers, attracting quality advertisers. We power this curated ecosystem with a quality end-to-end solution that incorporates quality data, quality creativity and quality service. We believe this is the key differentiator for Teads in the industry.

Fully Integrated, End-to-End Platform That Provides Greater Efficiency, Effectiveness and Innovation for Our Customers and Publishers. Teads Global Media Platform connects the world’s leading advertisers and their agencies through a single access point to differentiated and exclusive publisher inventory in one end-to-end integrated environment. We offer our customers a comprehensive suite of products, purpose-built to work together seamlessly, leveraging open source tools as well as our proprietary machine learning algorithms across the value chain. This seamless integration, together with the data and insights sourced from our end-to-end model, significantly reduces the complexity and cost to our customers of the otherwise fragmented Open Web experience. We believe our end-to-end solution also allows our product and engineering team to innovate faster than our competition, who must rely on dozens of integrations with third-party technology partners whenever they want to roll out a new innovation. We believe the combination of these advantages increases customer ROI, maximizes publisher monetization and drives our superior financial performance.

Diverse and Engaged Customer Base of Global Advertisers and Premier Agencies. We are deeply integrated in the agency ecosystem, including the largest global agency groups. These agencies typically act as the agency of record for the advertisers, even when the decision making is advertiser-directed. As of December 31, 2020, we work with approximately 2,000 agencies and advertisers who spend a minimum of $1,000 annually with us. Our advertiser customers are highly diverse by geography and by industry. We enjoy high customer retention; our Gross Customer Retention Rate was 94% in each of the years ended December 31, 2019 and December 31, 2020, a strong performance considering the impact of the COVID-19 pandemic, and we have steadily grown both the number of customer relationships (from approximately 1,150 customers in 2016 to approximately 2,000 in 2020).

 

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Exclusive Partnerships with Premium Publishers at Scale. We benefit from longstanding partnerships with many of the world’s leading publishers, allowing us to reach 1.9 billion unique monthly users worldwide (as of April 2021). As of March 31, 2021, we had about 3,100 editorial publishers on our platform, representing more than 15,000 web and app properties that provide access to more than one trillion ad opportunities every year. Over 80% of our publisher relationships are contractually exclusive to Teads for outstream video advertising. In the year ended December 31, 2020, our Publisher Retention Rate was approximately 99% and we have an average publisher relationship length over five years for our top 50 publishers. Our full-stack monetization capabilities, track record of delivering strong outcomes and the trust that we have earned with our partners are critical to establishing our exclusive engagements.

Comprehensive Suite of Solutions Powered by a Culture of Innovation. We are built upon a history and culture of innovation, having pioneered outstream digital video ads with Teads InRead, which we believe is the market’s leading outstream product. We offer a comprehensive suite of solutions to advertisers and their agencies, comprising our buying interface (Teads Ad Manager), creative tools (Teads Studio), powerful audience targeting capabilities (Teads Audiences), guaranteed outcome pricing options enabled by our innovative prediction models and both branding and performance advertising. For publishers, we offer Teads for Publishers, a full monetization platform that includes our proprietary SSP, ad server, video player and all the solutions that our customers have access to as well. Our innovative culture allows us to continually evolve our products to anticipate the future needs of customers and publishers.

Truly Global Footprint with Opportunities for Growth in All Regions. Unlike many digital advertising companies that tend to be strong in only a few markets with limited presence and penetration in most other markets, we have built strong infrastructure, teams, partnerships and customer bases in most major digital advertising markets globally. Our revenue (after intersegment, i.e. DSP revenue reallocation) is proportionally split to match the size of the market opportunity in each market/region: 40.1% in North America, 46.6% in EMEA, 6.9% in Asia Pacific, and 6.4% in South America for the year ended December 31, 2020. We are also uniquely positioned as a global premium provider because we have significant premium publisher partnerships in all markets in which we operate, which is a result of strong publisher development teams based locally in each market and region. We believe each region and each market has significant growth potential and we can leverage assets we have built in these markets for growth.

Simplified Approach to Data-Driven Dynamic Creatives. Teads Studio, our main creative tool, offers an integrated creative and data platform to enable advertisers to easily personalize their creatives based on dynamic signals, such as time, location, weather, device or audience segment. Moreover, we offer pre- and post-testing tools to determine the best creative decisions and work closely with creative teams to understand their specific objectives in reaching and engaging the target audience. The scope of our creative capabilities extends to dynamic creative optimization, interactive display and augmented reality – all with a singular focus on driving superior outcomes for our customers and partners.

Highly Scalable, Cloud-Based Technology Platform. Technology is at the heart of our business. Our platform was built in-house by our software engineers, based on open-source technologies and is highly scalable. We host our systems in the cloud, primarily on Amazon AWS and Google Cloud Platform, allowing us to run a highly cost-effective platform that supports campaigns and targets users globally. We collect enormous amounts of data, including more than 100 billion data points per day from our 1.9 billion unique monthly users (as of April 2021). We leverage our scale data and data science capabilities to inform 50 prediction models, which we believe improve advertiser ROI and enable unique advertiser offerings like guaranteed outcome pricing options. Furthermore, our algorithms allow us to predict users’ behavior on our publisher partners’ pages with a sufficient degree of certainty to enable us to sell content on a guaranteed performance basis, which is a key differentiator in the industry.

Innovative, Privacy First Approach to Consumer Targeting Positions Us Favorably for a Cookieless World and Other Industry Changes Related to Identity. Aligned with our respectful user experience in our advertising formats, we take a privacy-first approach to the consumer. As our industry grapples with the

 

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challenges of the deprecation of cookies for targeting and tracking, we have taken a proactive approach to building cookieless solutions that respect consumer privacy. There are several structural and operational factors driving our approach. Being integrated with the best content, we have always leveraged the context of an article to ensure relevance to an ad that will appear next to it. By analyzing the content semantically, we can develop audience profiles in real-time without a cookie. Our direct integrations with our publisher partners allows us access to more data signals not tied to a user ID that can feed our advanced machine learning algorithms. We believe we are one of the few in the industry to leverage Google’s Privacy Sandbox solution, which allows us to target users without unique identifiers on the Chrome browser. Google recently announced that they will not use email identifiers in their solutions for the Open Web. Many of our peers had adopted email identifiers as their alternative to cookies, which is undermined by Google’s position. Teads’ cookieless strategy does not rely on email identifiers so we are not affected. We believe our cookieless solutions are very effective. According to Nielsen DAR, using our cookieless technology for real-time demographic targeting demonstrates 25% greater accuracy in comparison to classic cookie-based data segments.

Unique Combination of Scale and Profitability. We have grown our revenue to $540.3 million in 2020 and $126.6 million in the three months ended March 31, 2021, which makes us one of the largest advertising technology companies in the industry. At the same time, we have also achieved a profit for the year/period of $111.5 million in the year ended December 31, 2020, which represents a 20.6% profit margin, and $28.0 million in the three months ended March 31, 2021, which represents a 22.1% profit margin, and an Adjusted EBITDA* of $173.8 million in 2020, which represents 32.2% of our revenue for the corresponding period, and $38.7 million in the three months ended March 31, 2021, which represents 31% of our revenue for the corresponding period. We believe that our performance is made possible by our end-to-end platform, significant scale, long-standing customer and publisher relationships and lean, capital-efficient operations.

Proven, Founder Led Management Team, Backed by Best in Class Organization. Teads S.A. was founded approximately 15 years ago by Pierre Chappaz and Bertrand Quesada, based on a culture of continuous innovation in the advertising industry. Since then, we have expanded to 36 offices in 23 countries, employing approximately 820 employees as of March 31, 2021, and generating $540.3 million of revenue in the year ended December 31, 2020 and $126.6 million of revenue in the three months ended March 31, 2021. The original founding team continues to lead the Company today, and we have complemented our management team with a talented group of managers based around the world. We believe the quality of our people and the continued entrepreneurial culture bestowed by our founders provide a powerful differentiator in the industry.

Our Platform

We provide both demand- and supply-side solutions to deliver better media effectiveness for advertisers, better monetization solutions for publishers and better ad experiences for Internet users. Teads Global Media Platform was purpose-built to provide an end-to-end integrated suite of products across the entire digital advertising stack while leveraging robust data and insights driven by machine learning to generate superior results for our advertising customers and publisher partners.

For Advertisers & Agencies

 

   

Enable media buyers to effectively manage digital advertising campaigns

We provide a single access point to reach 1.9 billion unique monthly users (as of April 2021) through the highest quality publishers through the Teads Ad Manager. This comprehensive self-serve, cloud-based product enables advertisers and agencies to:

 

   

plan and purchase digital media programmatically on the Open Web’s most relevant, premium publishers;

 

   

use audience and contextual data targeting in order to optimize campaign results;

 

* 

Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see “Summary Historical Consolidated Financial and Other Data.”

 

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monitor and manage ongoing digital advertising campaigns on a real-time basis;

 

   

use guaranteed outcome pricing options such as cost per completed view or cost per visit (“CPV”) for greater control of cost and ROI;

 

   

optimize outcomes for the full marketing funnel from awareness to consideration to conversion; and

 

   

get audience insights on who is engaging with their ads.

 

   

Provide guaranteed outcomes to advertisers through highly effective predictive machine learning

From the beginning, we differentiated ourselves in the industry by guaranteeing outcomes to advertisers using our predictive technology. In digital advertising, customers usually pay for each instance an ad is displayed to a user. However, this does not guarantee that the user sees the ad for long enough to have an impact. For performance advertising, customers want the user to click on an ad and engage in further actions. By leveraging our predictive algorithms, we are able to predict to a high level of probability whether a user will see and/or interact with an ad. Even though we pay publishers for each instance an ad is shown, with accurate predictions, we only show an ad when we predict the user will see it or interact with it. This allows us to offer with confidence a guaranteed pricing model for advertisers such as cost per completed view of a video or CPV to a landing page.

 

   

Ensure brand safety, viewability and engagement through premium and exclusive inventory

We are resolutely focused on curating the best possible inventory for our customers. Through our platform, advertisers secure exclusive in-article placements for their ads in the heart of premium editorial content. Our flagship InRead ad experience provides compelling and brand-safe solutions across both outstream video and display formats to maximize user attention. As of 2019, our viewability was 6 times that of social media platforms. We have retained this level of viewability in 2021. We consistently apply this disciplined approach as we assess complementary and emerging supply sources to further extend our differentiated inventory.

 

   

Fuel consumer engagement through data-driven dynamic creatives

To help advertisers create beautiful, data-powered, more engaging video and display ads that work across any device, advertisers use Teads Studio. Customers may opt to use Teads Studio as a self-service platform to enhance their creatives or work with our team directly through campaign ideation, execution and delivery. We believe Teads Studio simplifies the process of personalizing ads based on dynamic signals, reinforces branding through conversion of TV commercials to mobile experiences and deepens engagement.

 

   

Target audiences with accuracy, scale and privacy compliance

We also provide a complete suite of audience and contextual targeting solutions so that advertisers can reach the audience they want and achieve optimal results on their campaigns. Teads Audiences leverages advertisers’ own first-party data as well as a comprehensive range of second- and third-party data providers, giving advertisers access to over 400,000 audience segments. Additionally, we also have insights into what users read on publishers’ pages through leveraging semantic analysis, allowing our platform to build privacy compliant segments, including powerful interest segments, Teads Interest Graph, that we believe generates superior results. Uniquely, we solve a difficult problem that advertisers face - advertisers want both maximum reach and accuracy, but usually one comes at the expense of the other. We seek to resolve this by selecting the most accurate data from all our data sources and combining them into aggregated segments that maximize accuracy and reach without sacrificing one or the other.

Teads Audiences is very important in ensuring our targeting solutions are fully usable as cookies are deprecated in the industry. We believe we were one of the first to begin building

 

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cookieless solutions and we believe we are at the forefront of the industry with a range of cookieless targeting solutions. Our solutions include real-time profiling, which uses data signals in real-time to profile a user without using any individual identifiers. Additionally, we have built a next generation contextual targeting solution, which leverages a multitude of real-time data signals to select placements for the advertiser to generate optimal results. Finally, we believe we are one of the few companies in the industry to leverage Google Chrome’s alternative to cookie solution, FLoC.

For our Publisher Partners

We provide a full stack monetization platform, Teads for Publishers, to publishers to manage and monetize their in-article inventory. The platform is cloud-based and can be operated by publishers on a fully self-serve basis to:

 

   

Manage demand sources via our proprietary SSP, which provides seamless management and integration with all demand sources. This includes the publisher’s own direct sold demand and our generated demand through Teads Ad Manager.

 

   

Manage yield through advanced trafficking and real-time analytics. Publishers are provided with hourly reporting and insights on all advertiser campaigns running across their websites.

 

   

Improve inventory suitability for advertising by ensuring compliance with Interactive Advertising Bureau transparency requirements and user privacy compliance related to the GDPR, CCPA and other regulations. The platform also provides integrated brand safety monitoring and fraud filtering tools.

 

   

Deliver direct sold campaigns via our publisher ad server and a video player that is directly integrated into publishers’ pages and supports a wide range of technical contexts. Similar to our customer solution, publishers also have access to Teads Audiences (our comprehensive suite of data solutions) and Teads Studio (our dynamic creative optimization and building tool). Like our advertiser solution, Teads for Publishers is underpinned by our data and machine learning algorithms.

Our publisher solution provides our partners with a complete set of tools to enhance monetization on their highest value inventory in a trusted environment. The strength of our end-to-end platform and our demonstrated results have translated into over 80% of all publishers establishing contractual exclusivity with us for their in-article video inventory.

Our Technology

Integrated End-to-End Platform. Using open source technologies, we have built and own the underlying technology that connects the advertiser to the end user. Our algorithms, prediction models, customer interfaces, integration software development kits, data platforms and network infrastructure all act as a consistent suite of products, designed to work together seamlessly. Our engineering teams, building technology for both publishers and advertisers, are highly interconnected on a day-to-day basis. This deep level of technology integration and team collaboration enables us to (i) have better control over quality and outcomes; (ii) build products that are powerful and easy to use; and (iii) innovate at a faster pace.

Integration Directly on Publisher Pages. Our integration on publisher pages in rich textual content allows us to extract qualitative signals from users’ navigation, which feed our machine learning algorithms. In January 2021, our data platform collected, processed and stored an average of 100 billion data points per day, allowing us to customize our algorithms to deliver better results than more generic solutions, designed to run in heterogeneous contexts. The trusted relationships we have established with our publisher partners allow for direct integration into their pages (our code is on the publisher’s page), giving us direct access to browser data and new privacy application programming interfaces (“APIs”).

 

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Profiling Users Without Dependency on Cookies. We combine various techniques to provide efficient cookieless targeting, combining reach and accuracy. We leverage our integrations in rich textual content to run semantic analysis and extract the topics and meaning of the content from the page in real time. We build and run learning models that correlate contextual data, such as the content of the page, the device, the time of the day, and other data signals, with users profile attributes such as socio-demographic or interests. Our models are trained on a part of traffic where we have identification(s) mechanism(s), including but not limited to third-party cookies, Google Privacy Sandbox, publisher first-party data, and logged in ID. With this learning, we can then profile the user in real time using only contextual signals when no other identification technique is available. We also leverage our code on the publisher page to have direct access to privacy-compliant APIs from internet browsers. Finally, our abstraction layer, known as Teads Audiences, is used in all our systems to feed algorithms and exploit data regardless of whether it comes from cookies, semantic context or browsers’ APIs.

Machine Learning Powered by Qualitative Signals. Using our proprietary machine learning framework, we have built and operate more than 50 predictive algorithms that make real-time decisions to maximize revenue for publishers and campaign outcomes for advertisers. In January 2021, we ran about 18 million predictions per second in our platform to deliver our service. Our prediction models perform real-time predictions across a range of processes, including but not limited to: video completion, ad viewability, pricing optimization, conversion, audience profiling, creative optimization and infrastructure optimization. This allows us to run a highly efficient and effective platform.

Speed to Market. Being able to implement new products and features with a short time to market is at the heart of our culture. We also apply these principles to our machine learning development. Our machine learning engineers and data scientists are not grouped into a central team, but rather divided into multiple product teams to collaborate more deeply with all product engineering teams. This helps us better understand business needs and more precisely leverage data signals. As a result, we believe we can deliver new machine learning algorithms faster. We typically need two weeks to go from conceiving to releasing a new algorithm based on existing data, and about one month to launch a new predictive algorithm requiring a new set of data that needs to be specifically captured. Existing algorithms are updated several times a day. We apply continuous deployment across our entire platform. On a typical day in 2021, our engineering teams deploy more than 40 software releases on our infrastructure.

A Lean Cloud-Based Infrastructure. We have built our technology infrastructure using a distributed and modern architecture on a global scale. We mainly use Amazon Web Services and Google Cloud Platform as our cloud infrastructure providers. At the end of 2020, our servers ran an average of 35,000 virtual central processing units per day, allowing us to process 16 trillion bid requests per month. On average, our platform only takes 100 milliseconds to receive an ad request from a publisher, run auctions including Teads Ad Manager demand and external DSPs, run our predictive algorithms and return a targeted, optimized ad to the user. The elasticity of our infrastructure allows us to resize automatically and in real time the numbers of servers we require in order to adapt to traffic and seasonality, while controlling our costs. This results in a highly scalable technology architecture.

We leverage various proprietary machine learning algorithms to filter out available ad inventory that we predict will not be sold. We also automatically cut low quality inventory to keep only the best inventory in order to run efficiently. Furthermore, our end-to-end platform allows us to predict the amount of user traffic that we need to deliver to our ongoing campaigns by using our algorithms to open and restrict the traffic allowed to enter the platform in real time in accordance with our needs, prioritizing quality over volume. Combined with other technological features, this strategy allows us to maintain a competitive infrastructure cost to income ratio.

We have designed our infrastructure with multiple layers of redundancy to protect us against data loss and to provide high system availability. We achieved a 99.96% availability rate for our Teads Ad Manager platform over the last 12 months. Our main data centers are located in northern Virginia for the U.S. with six distinct availability zones of redundancy; Dublin for Europe with three distinct availability zones; and Tokyo for Asia Pacific with three distinct availability zones. In addition, we leverage Akamai edge nodes for content delivery and edge processing in over 130 countries.

 

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Our on-call engineering team is available 24/7 to ensure that any issues that arise with our platform can be mitigated within minutes.

Growth Strategy

We believe that we are in the early stages of growth and see significant upside for the business and industry overall. We plan to leverage our leading brand and positioning to pursue several long-term growth initiatives:

Increase Sales From Existing Customer Base. Our comprehensive portfolio of digital advertising solutions has grown to encompass a variety of display and video products as well as branding and performance advertising formats. We believe we can increase sales to existing advertiser and agency customers by capturing additional advertising spend across our portfolio of products and solutions. For example, many of our customers first used our platform for brand advertising and have now started to use us for performance advertising campaigns, increasing our share of their total advertising spend. Additionally, as customers seek to shift more spend away from the Walled Gardens, they will require quality inventory and a single access point to this inventory, which our Curated Internet ecosystem aims to provide.

Acquire New Customers and Publisher Partners. We plan to continue acquiring new high-quality publishers and advertisers and agencies around the world. We believe our scaled premium demand and full stack monetization platform offers publishers a clear value proposition. We expect to increase our market share among global advertisers and agencies through our ability to increase ROI through our portfolio of leading advertiser-centric solutions and by providing a single point of access to the world’s best publishers.

Expand Customer Base Internationally. As the global advertising landscape becomes more sophisticated, we plan to focus on high-growth markets where Teads is under-indexed. We believe we have formed a leadership position in the EMEA and U.S. markets and anticipate using this experience to be a leader in new geographies. Believing that Asia Pacific represents our fastest-growing market opportunity, we launched our Singapore and Tokyo offices four years ago. The Asia Pacific market remains underpenetrated, despite already experiencing substantial growth since our entry.

Grow Our Performance Advertising Business. Performance advertising addresses the needs of our advertiser customers who focus on linking ad spend to measurable outcomes and deeper user engagement, including leads, sales and mobile app installs. As our customers shift ad budgets to performance-based advertising, we believe we are well-positioned to capture more of their spend. Our leadership in ad viewability, optimizing creatives and measuring outcomes and our ability to optimize outcomes with machine learning positions us favorably in performance advertising. From launch three years ago, our performance advertising business is now a significant driver of our growth.

Continue to Innovate Our Solutions While Accessing New, Quality Supply Sources. We intend to extend our inventory sources and gain exposure to large and high-growth segments of digital advertising, including:

 

   

Connected TV (CTV): We are investing in new technologies to capture the ongoing shift of ad budgets from linear TV to CTV. We believe our premium positioning, strong legacy in brand awareness advertising, existing partnerships with customers and publishers and an end-to-end digital advertising platform is uniquely aligned with CTV and will allow us to enter the segment more easily and with a strong, differentiated positioning.

 

   

Mobile Apps: The mobile in-app ad market represents a compelling and complementary inventory source for us to provide to our customers. We believe we can leverage our premium positioning to secure app-focused publishers who seek more premium demand. We believe we can also leverage our performance advertising capabilities and data science expertise to effectively compete in the performance heavy in-app ecosystem.

 

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Pursue M&A to Create Value. Our industry is highly fragmented, with many undercapitalized players and point-solutions. We believe we are well-positioned to identify and acquire market share or new capabilities as the industry consolidates to fewer, more scaled platforms.

Our Customers and Partners

We have an attractive, diversified customer base of advertisers and agencies and a partner base of publishers that is global and loyal. Our customer and partner relationships, supported by our leading solutions, have driven significant growth in our business. As of March 31, 2021, we worked with about 3,100 publishers and as of December 31, 2020 approximately 2,000 customers, defined as advertising agencies and advertisers who spend a minimum of $1,000 annually with us.

Advertisers and Agencies. Our advertiser and agency customers access our solutions directly through our platform and indirectly through third-party DSPs. We serve some of the most iconic global brands across a variety of industries that include retail, consumer packaged goods, automotive, technology, luxury and others. In most cases, our advertiser customers access our solutions through their advertising agencies. We have deep, collaborative relationships with the major agency holding companies such as Publicis, WPP, Omnicom, Vivendi’s Havas, IPG and Dentsu and most of their subsidiary agencies across the globe. For the largest and most strategic advertisers, we maintain direct relationships through joint business partnerships pursuant to which we provide additional value added services. We work collaboratively with their agencies to serve these partnerships. We also maintain long-term relationships with leading DSPs such as The Trade Desk, Google’s Display and Video 360, whom some of our agency and advertiser customers leverage to access our platform.

We believe our customers continue to choose us due to our scale and reach, high-quality ad placements and integrated technology platform. Among our customers who spent more than $150,000 in the year ended December 31, 2020, which accounted for 80% of our revenue, we experienced 6% churn. Our Gross Customer Retention Rates were 94% for each of the years ended December 31, 2019 and December 31, 2020. Large customers who spend more than $1 million of annual revenue with us represent a significant portion of our total revenue, contributing approximately 60% to our total revenue for the year ended December 31, 2020. We have almost doubled the number of large customers from 2017 to 2020 and have grown the revenue from our large customers at a CAGR of 33% from 2017 through 2020. No customer represented more than 5% of our revenue in either the year ended December 31, 2019 or the year ended December 31, 2020, demonstrating the dispersion of our customer base. We have approximately 2,000 customers who spend at least $1,000 per year with us.

Publishers. We have relationships with about 3,100 publishers globally, representing over 15,000 web and app properties, giving advertisers access to 1.9 billion unique monthly users (as of April 2021). Over 80% of our publisher partners are exclusive to us for their in-article video placements. Most of our publisher contracts are two years in length and on an auto-renewal basis.

 

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Unique Monthly Users* Per Region (as of April 2021)

 

LOGO

 

*

Monthly unique visitors are unduplicated visitors to all of our publishers’ websites per month, where visitors to all of our publishers’ websites are de-duped across all websites within a calendar month.

The geographic breakdown of the end-users on our publisher partner properties is highly diverse with 14% from North America, 22% from EMEA, 45% from Asia Pacific and 15% from South America. In total and as of April 2021, we reached 1.9 billion unique monthly users that includes 87% of internet users in North America, 86% of users in Latin America, 87% of users in Western Europe, 26% of users in Central & Eastern Europe, 15% of users in the Middle East & Africa, and 78% of users in Asia Pacific (excluding China). We created tremendous value for our publisher partners over many years, helping them monetize their valuable digital ad inventory. This has driven a highly attractive Publisher Retention Rate of approximately 99% for the year ended December 31, 2020.

Our Advertiser Customers

Our advertiser customers consist of premium brands and include a wide range of companies. We also serve the largest advertising agencies and help best serve their brand customers. Given the power of video advertising, these advertisers and agencies look to us to promote their brands and increase consumer engagement.

The following case studies provide examples of how our advertisers are using and have benefitted from our platform.

Adidas

Adidas is a German multinational corporation that designs and manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe.

Adidas was looking to improve the average user exposure time (viewability) of its brand video ads and to drive incremental, quality traffic to its ecommerce website. Adidas partnered with Teads to leverage its highly-viewable branding ad formats as well as its traffic acquisition solutions across brand safe, premium publisher inventory.

According to Adidas, Teads outperformed Adidas’ quality KPIs for branding in terms of viewability and brand safety. Through Teads’ traffic acquisition solution, Adidas consistently brought above-benchmark incremental quality traffic as well as providing significant cost savings.

 

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Adidas has renewed its global joint business partnership with Teads for 2021, the fourth consecutive year.

Danone

Danone is a leading multi-local food and beverage company building on health-focused and fast-growing categories in three businesses: Essential Dairy & Plant-Based products, Waters and Specialized Nutrition.

After having worked with Teads’ advertising solutions in several countries, Danone was looking to expand its collaboration with Teads across a wider geographic footprint. Danone’s need for quality, brand safe advertising inventory, as offered by Teads, became even more relevant during 2020 as industry and consumer sensitivities around social media were heightened.

Danone chose Teads as a key partner shifting investment in multiple markets globally, leveraging not only the quality inventory, but creative studio optimizations, and custom audience targeting to ensure alignment with Danone’s previously identified high-value audience groups.

Not only did Teads deliver against the primary campaign KPIs but moved the needle considerably for brand lift and sales lift metrics. In a recent campaign for one of Danone’s dairy brands, Teads generated 2.8 times return on advertising spend, as measured by a leading industry third party.

Teads is now established as a global strategic media partner for Danone for the second year in a row.

Nissan

Nissan is a global car manufacturer that sells a full line of vehicles under the Nissan, INFINITI and Datsun brands.

Nissan has been activating media campaigns with Teads across a number of countries for several years but the challenges of the COVID-19 crisis brought the two companies to work more closely together. During the second quarter of 2020, Nissan Europe’s dealerships were shut by local lockdown restrictions in its key markets. As dealerships reopened several months later, Nissan aimed to reactivate its communication with an impactful advertising campaign in an economic context where every penny needed to work to the fullest.

After carefully reviewing various options, Nissan chose Teads as the key digital media partner for its European Fight Back plan based on Teads’ ability to cost-effectively deliver on KPIs. In addition to Teads’ quality media inventory, Nissan also leveraged Teads’ creative optimization and custom audience capabilities. The campaign was efficiently run across key European markets using Teads’ self-serve buying interface, Teads Ad Manager.

According to Nissan, the campaign over-delivered versus the media KPI’s in all key markets and provided significant cost savings versus Nissan advertising cost benchmarks. Additionally, according to Nissan, the campaign contributed to Nissan Europe exceeding its overall automotive sales target during the period. As a result of its performance in the European Fight Back plan and previous successes, Teads has now expanded the scope of its partnership in many more markets globally and is a key strategic partner.

Our Publisher Customers

Our globally diverse publisher customers range from the largest, most premium publisher brands to small- and medium-sized publishers, and include traditional print (newspaper and magazines) publishers, broadcast and cable television networks, digital media companies and other media conglomerates. Given the accelerated shift of content consumption towards digital platforms, all of these publishers are reliant on digital advertising to grow and diversify their monetization strategies.

 

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The following case studies provide examples of how our publishers are using and have benefitted from our platform.

VICE Media Group

Partner since: 2016

VICE Media Group (“VMG”) is one of the world’s largest independent youth media companies with offices in 35 cities around the world, reaching over 380 million consumers worldwide. VMG has five key business units which generate a diverse array of revenue streams: Vice Digital, which includes multi-platform properties such as Vice.com and Refinery29, Vice News, Vice TV, Vice Studios and VIRTUE.

Given the global presences of both VMG and Teads, the companies have had various local partnerships across their offices, including the UK and Japan, dating back to 2016. VMG started working with Teads to increase its video advertising inventory and monetization by implementing outstream video ad formats in its article pages. In 2018, VMG consolidated its local relationships with Teads into a global strategic partnership, whereby Teads provided a multi-year revenue guarantee on VMG’s web properties across the Americas, Europe and Asia, while VMG used our Teads for Publishers platform to enable its own direct sales of outstream video. According to VMG, today, Teads is one of VMG’s top third-party ad demand partners. VMG continues to not only leverage Teads as its exclusive outstream video partner, but also expanded usage of Teads technology to both video and display formats, campaign reach extension and in-app monetization with Teads Mobile SDK (software development kit).

Tribune Publishing Company, LLC

Partner since: 2016

Tribune Publishing Company (“Tribune Publishing”) is one of the largest local media publishers in the US. Headquartered in Chicago, Tribune Publishing operates both print and digital properties in eight markets including the Chicago Tribune, New York Daily News, The Baltimore Sun, and Orlando Sentinel, among other local titles, as well as The Daily Meal in the food category. Across its digital properties, Tribune Publishing generates revenue from both advertising and subscriptions.

In 2016, Tribune Publishing initially started using Teads technology in order to grow its viewable video inventory across its digital web properties. Prior to partnering with Teads, Tribune Publishing had limited video supply and was searching for a seamless and user-friendly path to grow its video inventory. According to Tribune Publishing, via an exclusive outstream video partnership, Teads became a top monetization provider for Tribune Publishing through a multi-year revenue guarantee, and helped Tribune Publishing grow its video inventory 10 times while also expanding Teads integration to its mobile app portfolio by 2019. Tribune Publishing now empowers its entire agency and programmatic sales team with our Teads for Publishers platform, which includes a unique set of interactive display and video products for its own direct sales efforts.

Condé Nast

Partner since: 2015

Condé Nast is a global media company, home to iconic brands including Vogue, The New Yorker, GQ, Glamour, AD, Vanity Fair and Wired, among many others. The company’s award-winning content reaches 84 million consumers in print, 367 million in digital and 379 million across social platforms, and generates more than 1 billion video views each month. With its rich content and sought-after audiences, Condé Nast employs multiple revenue streams across advertising, licensing, agency solutions and events, among others.

 

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With a global presence across 32 markets, Condé Nast has multiple partnerships with Teads offices around the world. Starting in 2015, Teads UK partnered with Condé Nast Britain, which owns a number of properties with a global audience, including Vogue, GQ and Glamour, among others. It was important for Condé Nast Britain to find an advertising monetization solution that could support its worldwide traffic, so it engaged Teads as a global revenue guarantee partner and exclusive outstream video provider across Condé Nast Britain’s web properties beginning in 2018. Condé Nast Britain is also a regular user of our Teads for Publishers platform to deliver a large number of its programmatic campaigns on a frequent basis and create custom ad creatives in Teads Studio.

Le Point Communication

Partner since: 2016

Founded in 1972 and based in Paris, Le Point is a premier weekly magazine publisher focused on news and politics in France. With hundreds of thousands of consumers accessing both print and digital versions of the magazine, Le Point depends on both subscriptions and advertising for revenue.

Le Point first partnered with Teads as an advertising monetization partner for outstream video on its online article pages in 2016. The magazine’s readers trust and are loyal to the brand due to the quality of the content.

Le Point chose Teads natively-positioned, in-article formats as they met those same quality standards. Le Point ultimately entered into a strategic partnership with Teads in 2018, choosing Teads as its exclusive outstream video partner and securing a multi-year, cross-platform revenue guarantee.

Le Point extended Teads monetization capabilities into its mobile in-app environment by integrating the Teads SDK (software development kit), which provided both video and display revenue and excellent performance, while ensuring GDPR-compliance and the same best-in-class user experience as on the web.

Our Go-to-Market Strategy

As a global, curated end-to-end advertising platform, our go-to-market strategy focuses on both increasing our advertiser and agency customer base and spend and on increasing our inventory with leading publishers.

On the advertiser end of our business model, we operate a two-pronged approach that targets both brands and their media planning and buying agencies. We manage relationships with our large, strategic advertisers through our strategic accounts team, who secure new strategic advertiser partners as well as grow existing ones. The strategic accounts team offers a range of in-house consultative services for our largest advertisers, including an account strategist to advise on how to leverage the Teads product portfolio, creative consultancy to help maximize campaign effectiveness, data consultancy to improve an advertiser’s targeting strategy and research and insights services to measure campaign effectiveness. We believe that the value we add to our most strategic customers through our consultative approach has a positive impact on average spend per customer and on customer retention.

In addition to our direct relationships with advertisers, we are also deeply integrated into the agency ecosystem. We have long-standing relationships with the big six holding companies, namely Publicis, WPP, Omnicom, Vivendi’s Havas, IPG and Dentsu as well as a range of smaller agencies. We employ a combination of global and local account management in order to manage our relationship with the agencies. Unlike the Walled Gardens, we employ a highly collaborative approach on client partnerships with agencies. Finally, we have master service agreements in place with all holding companies for our proprietary buying interface, Teads Ad Manager, which was the preferred interface for our customers to access our inventory during the year ended December 31, 2020. These agency partnerships provide us efficient centralized management of smaller advertisers who mostly leverage these agencies to manage their advertising spend.

 

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In addition, we also deploy a team exclusively focused on partnerships with DSPs, called our demand development team. Some of our agency and advertiser customers leverage DSPs to access our platform and supply. The demand development team manages our partnership agreements, integrations and product modifications and upgrades with DSPs and troubleshoots any issues with demand flow.

On the other end of our business model, we manage our relationships with publishers via our publisher management team, which secures, manages and retains our partnerships with all of our publisher partners, including negotiating exclusive contracts. We have locally-based publishing teams in all 26 markets in which we operate. Few companies can claim the ubiquitous local presence we have to manage premium publishers. Our ability to have close, local relationships helps us to secure and retain the world’s best publishers, which we consider one of our unique strengths.

Our Competition

Our industry is highly competitive and we have peers of varying sizes and ranges of establishment. On the demand side, we both compete and work with DSPs including The Trade Desk, and on the supply side, we compete with sell-side advertising platforms including Magnite and Pubmatic. As an integrated player, we also compete with players who have full stack solutions, including Xandr, Verizon, Google and Taboola. Additionally, we, along with other players in the Open Web, compete with the Walled Gardens. We believe our unique differentiation of providing quality at scale through an end-to-end platform positions us well to succeed. We constantly monitor the industry to understand what our peers are executing and how we can deliver a superior all-encompassing offering.

Our competitive advantages include:

 

   

global scale;

 

   

end-to-end technology solution across the value chain;

 

   

innovation;

 

   

independence/customer alignment;

 

   

guaranteed outcome pricing;

 

   

tenure of customer relationships;

 

   

exclusive publisher partnerships and premium inventory; and

 

   

data assets including cookieless solution.

Technology and Development

Our ability to compete depends in large part on our continuous commitment to technology and development and our ability to rapidly introduce new technologies, features and functionality. Our technology and development team is responsible for the design, architecture, testing and quality of our technologies/solutions. We focus our efforts on enhancing our existing technologies/solutions and developing new technologies/solutions for our customers and publishers.

Our technology and development teams are primarily located in Montpellier (France), Paris (France) and Bucharest (Romania). Our technology and development personnel are highly credentialed—78% of the personnel have advanced engineering degrees. As of March 31, 2021, we had 123 employees engaged in technology and development.

Technology and development expenses were $14.9 million and $16.0 million for the fiscal years ended December 31, 2019 and December 31, 2020, respectively, and $3.9 million for each of the three months ended

 

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March 31, 2020 and March 31, 2021, respectively, and we intend to increase our investments in technology and development in the future to support the developments of new technologies, features and functions for our solutions.

Intellectual Property

We rely on a combination of copyright, trademark and trade secret laws in the U.S. and other jurisdictions, as well as license agreements and other contractual provisions, to protect our proprietary machine learning algorithms. We also rely on a number of international and domestic registered, pending and common law trademarks to protect our brand.

As of June 15, 2021, we had 109 registered trademarks and 17 pending trademark applications worldwide.

In addition, we seek to protect our intellectual property rights by requiring our employees and independent contractors involved in development of intellectual property on our behalf to enter into agreements acknowledging that all works or other intellectual property generated or conceived by them on our behalf are our property, and assigning to us any rights, including intellectual property rights, that they may claim or otherwise have in those works or property, to the extent allowable under applicable law.

Despite our efforts to protect our technology and proprietary rights through intellectual property rights, licenses and other contractual protections, unauthorized parties may still copy or otherwise obtain and use our software and other technology. In addition, we intend to continue to expand our international operations, and copyright, trademark, trade secret and other intellectual property protection may not be available or may be limited in foreign countries. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Further, many companies in the technology advertising industry own large numbers of patents, copyrights and trademarks and may threaten litigation or file suit against us based on allegations of infringement or other violations of intellectual property rights. We may face in the future allegations that we have infringed the intellectual property rights of third parties. See “Risk Factors—Risks Related to Our Business—We may incur liabilities for which we are not insured, and may suffer reputational damage in connection with certain claims against us.” for additional information.

Privacy and Data

There is an increasing awareness of how Internet user data is being leveraged to target ads, resulting in a growing number of privacy laws and regulations being established globally, including the GDPR in the European Union. We believe these trends will continue locally and globally. There have also been a growing number of consumer-focused non-profit organizations and commercial entities advocating for privacy rights. These institutions are enabling Internet consumers to assert their rights over the use of their online data in advertising transactions, a trend which we support.

The digital advertising landscape must continue to adapt to these trends and incorporate awareness of consumer privacy and compliance with regulatory authorities. For example, publishers, and their downstream supply and demand partners, are required to obtain unambiguous consent from European Union data subjects to process their personal data. Further, the European Union is currently in discussions to replace the ePrivacy Directive (commonly called the “Cookie Directive”) with an ePrivacy Regulation that governs the use of technologies that collect, access and store consumer information and may create additional compliance burdens for us in Europe. Other jurisdictions have enacted legislation that closely tracks the concepts, obligations and consumer rights described in the GDPR, including, among others, Brazil’s General Data Protection Law, the Canadian Personal Information Protection and Electronic Documents Act and Thailand’s Personal Data Protection Act. Some jurisdictions, including Russia and China, have in recent years enacted data localization laws, which require any personal information of citizens of those jurisdictions to be stored and processed on servers located in those jurisdictions. Such laws are gaining momentum and are being enforced by local authorities.

 

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Also, as part of the European Digital Strategy, Shaping Europe’s Digital Future, it was announced that the European Commission would upgrade the rules governing digital services in the European Union. The European Commission proposed two legislative initiatives: the Digital Services Act and the Digital Markets Act. The Digital Services Act and the Digital Markets Act have two main goals: (i) to create a safer digital space in which the fundamental rights of all users of digital services are protected and (ii) to establish a level playing field to foster innovation, growth and competitiveness, both in the European single market and globally. This proposed legislation, both in the European Union and in other jurisdictions around the world, could expose businesses like ours to more onerous regulations and expansive liability. For instance, the Digital Services Act intends to limit or remove protections afforded to us under the eCommerce Directive. While the scope and timing of such proposed legislation are currently uncertain, if enacted and applied to our business, we may be required to expend significant amounts of time and resources to comply with such legislation, which may adversely affect our business.

In addition to legal and policy requirements, participants in the digital advertising supply chain were encouraged to agree upon technical specifications to collect and transmit detailed records of consent (or an alternative basis for the processing of personal data) and the purposes of that data processing. This demand resulted in widespread adoption of the Interactive Advertising Bureau (“IAB”) Transparency & Consent Framework 2.0 (“TCF”) in August 2020. Prior to the TCF, dueling technical standards resulted in industry-wide confusion following adoption of the GDPR.

Over the years, Apple has greatly limited the use of third-party cookies within its web browser (“Safari’s Intelligent Tracking Prevention”) and recently announced the decision to make the app-based IDFA opt-in by consumers rather than opt-out. Google has also announced its intention to deprecate third-party cookies in 2022 and provide alternative solutions for audience targeting and tracking. Google and Apple are leading an active industry dialogue to deliver the next wave in privacy compliant advertising solutions. We believe that the cookie landscape will continue to evolve and it is critical to understand what this could mean for advertisers. Teads has proactively developed cookieless solutions in anticipation of these changes and we believe we are well-positioned to not only comply with the changes but also benefit from additional spend shifted to us from other suppliers who are not ready with alternative solutions. See “Risk Factors—We, our customers and our publisher partners are subject to laws and regulations globally, including those related to data privacy, data protection, information security, consumer protection across different markets where we conduct our business, including in the U.S. and Europe, and industry requirements and such laws, regulations and industry requirements are constantly evolving and changing. Our actual or perceived failure to comply with such obligations could have an adverse effect on our business, results of operations and financial condition.” for additional information.

Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights, employment discrimination and breach of contract. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, reputational impact and other factors.

 

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Facilities

Our corporate headquarters are located in Amsterdam, the Netherlands. Since mid-March 2020, all headquarter personnel have been working remotely. We also maintain regional offices in the countries of our operation for regional sales and marketing, technology and development and customer support personnel. We maintain data center co-location facilities in northern Virginia, Dublin and Tokyo. We believe that our current facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.

Culture, Employees and Human Capital Management

Our culture and our team are the most important asset in building and expanding our business. We have built our culture around the success of our customers, our partners, our employees and our investors. We have carefully recruited, selected and developed employees who are highly focused on delivering success for our customers. This strategy is a crucial element of our hiring and evaluation processes throughout all departments. We believe this approach produces high levels of both customers’ and publishers’ success and employee engagement.

Our people strategy revolves around creating employee experiences that foster deep employee engagement built upon personal development and achievement that is supported by continuous feedback, learning and team building. Our steadfast focus on driving employee engagement has resulted in increasing employee retention rates (approximately 88% annualized voluntary employee retention through the end of 2020) and average global tenure (3.3 years as of December 31, 2020). We have achieved these results by delivering custom learning programs and creating opportunities for advancement that align with the dynamic needs of our business. Our practice of open and transparent communication coupled with a performance-based approach to compensation has created a culture in which employees feel empowered in their ability to influence and impact our business and be rewarded for their efforts.

In 2020, we had an average of 803 full-time employees throughout the year.

Our employees are primarily located in the U.S., the United Kingdom, Europe and Asia Pacific. From time to time, we also utilize independent contractors, brokers and consultants. None of our employees are represented by a labor union or are a party to a collective bargaining agreement and we consider our relationship with our employees to be strong.

 

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MANAGEMENT

The following table sets forth certain information regarding our directors and executive officers as of the completion of our corporate reorganization, which will occur prior to the closing of this offering. The term of office of our directors is set by the general meeting and the first terms of office of each director expires on the date specified in the table below. The business address for our directors and executive officers is Danzigerkade 15B, 1013 AP Amsterdam, the Netherlands.

 

Name

  

Age

    

Position

  

Term of
Appointment

 

Executive Directors

        

Pierre Chappaz

     62      Founder and director      4 years  

Bertrand Quesada

     44      Co-Founder, Chief Executive Officer and director      3 years  

Non-Independent Non-Executive Directors

 

     

David Drahi

     26      President and director      4 years  

Graziella Drahi

     28      Director      4 years  

Dexter Goei

     49      Director      3 years  

Malo Corbin

     37      Vice President and director      4 years  

Natacha Marty

     47      Director      3 years  

Tal Granot-Goldstein

     44      Director      3 years  

Independent Non-Executive Directors

        

Jurgen van Breukelen

     52      Chairman and director      4 years  

Mark Mullen

     56      Director      3 years  

Raymond Svidor

     58      Director      3 years  

Non-Director Executive Officers

        

Jeremy Arditi

     38      Chief Commercial Officer   

Caroline Barbery

     46      Chief Financial Officer   

Jim Daily

     39      Global President   

Gilles Moncaubeig

     44      Co-Founder and Chief Product Officer   

Eric Pantera

     40      Chief Technology Officer   

Eric Shih

     43      Chief Supply Officer   

Todd Tran

     46      Chief Strategy Officer   

Ines Quesada

     45      Chief People Officer   

Meg Runeari

     36      Chief Experience Officer   

Rémi Cackel

     34      Chief Data Officer   

Our Directors

        

Pierre Chappaz

        

Founder and director

        

Pierre has served as a director of the Company since 2021. Pierre has years of experience in marketing and technology. Pierre has worked in different marketing and communications roles for Toshiba, Legent (now part of Computer Associates) and IBM Europe before founding Kelkoo (a leading comparison shopping web service) in 1999 and selling it to Yahoo! in 2004. He teamed up with Bertrand Quesada approximately 15 years ago to found the company that became Teads. Pierre leads our Innovation, Technology and Finance functions at Teads. Pierre graduated from prestigious Ecole Centrale de Paris (France). He likes to be called “The Coach”.

 

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Bertrand Quesada

Co-Founder, CEO and director

Bertrand has served as a director of the Company since 2021. Bertrand has spent the last 20 years founding and growing international advertising technology companies. Approximately 15 years ago, Bertrand joined forces with Pierre Chappaz to found the company that became Teads. In 2017, Bertrand was named the Most Liked Advertising CEO in the industry by Business Insider. Previously, he was Director of Business Development at Espotting, which pioneered pay-per-click search engine advertising in Europe. Bertrand holds a bachelors of science in Business Administration from KEDGE Business School in Bordeaux, France.

David Drahi

President and director

David has served as a director of the Company since 2021. David joined Altice USA, Inc. as a director in 2019 and the Altice group as a manager in 2021. Previously, he worked at Cabovisao, formerly owned by the Altice group, and Icart, a former subcontractor of the Altice group. David holds a BSc in Physics at Ecole Polytechnique in Lausanne, Switzerland, an MSc in Optics and Photonics from the Imperial College of London and a DPhil in Atomic and Laser Physics from the University of Oxford. His research covered the fields of Quantum Optics and Quantum Cryptography.

Graziella Drahi

Director

Graziella has served as a director of the Company since 2021. Graziella currently serves as the Head of Mobile for Altice USA, Inc. Prior to this, Graziella gained operational and corporate financial knowledge in telecommunication via diverse roles, such as: Financial Controller at Altice USA, Inc. and Business Controller for Altice Management International. Graziella also gained financial experience at Morgan Stanley London and Deloitte Israel. Graziella holds a bachelor’s degree from IDC Herzliya in Business & Administration.

Dexter Goei

Director

Dexter has served as a director of the Company since 2021. Dexter joined Altice USA, Inc. (which includes the Optimum and Suddenlink branded digital cable television, high-speed Internet, voice, WiFi and data products and services) as the Chairman and Chief Executive Officer in 2016. He currently serves as the Chief Executive Officer of Altice USA, Inc. He was previously the Chief Executive Officer and the President of the Board of New Altice Europe’s predecessor. Prior to joining the Altice group, he spent 15 years in investment banking with first JP Morgan and then Morgan Stanley (as the Co-Head of Morgan Stanley’s European TMT Group when he left Morgan Stanley to join the Altice group in 2009) in their Media & Communications Group in New York, Los Angeles, and London. Dexter holds a BS (cum laude honors) in Foreign Services (in International Economics major) from the Edmund A. Walsh School of Foreign Service at Georgetown University.

Malo Corbin

Vice-President and director

Malo has served as a director of the Company since 2021. Malo joined the Altice group in 2015 and currently serves as the Chief Financial Officer of New Altice Europe. Previously, he was the Finance Director for New Altice Europe’s predecessor and the Chief Controlling Officer and Vice President M&A for the Altice group. Before joining the Altice group, he was Vice President in the Telecom & Technology Group of Lazard covering Europe, the Middle East and Africa. Malo is a graduate from Ecole Centrale Lyon.

 

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Natacha Marty

Director

Natacha has served as a director of the Company since 2021. Natacha is currently liquidator and the General counsel and Company Secretary of New Altice Europe (prior to New Altice Europe’s dissolution, she was an executive director). Prior to joining the Altice group in 2015, she worked as an associate at Freshfields Bruckhaus Deringer and a counsel at Davis Polk & Wardwell, where she contributed to founding the firm’s French law practice. Natacha has a strong international background, having worked in Paris, London, Geneva and New York over the past 22 years. She developed significant expertise in corporate governance, equity and debt capital markets and credit transactions, and has extensive experience in cross-border merger and acquisition transactions. Natacha holds an Master in Law from the Université Panthéon Assas - Paris II.

Tal Granot-Goldstein

Director

Tal has served as a director of the Company since 2021. Tal has 20 years of experience in the telecommunications market and has served as the Chief Executive Officer of the HOT Telecommunication group since 2015. Prior to this appointment, she was the Deputy Chief Executive Officer and B2C Manager of the HOT Telecommunication group. Tal has also served as Chief Executive Officer of an integration company and, prior to that, as Vice President of Human Resources and Operations and Management at 012 Golden Lines.

Jurgen van Breukelen

Chairman and director

Jurgen is expected to join our board upon closing of this offering. Jurgen currently serves as liquidator of New Altice Europe (prior to New Altice Europe’s dissolution, he was an independent non-executive director and the Chairman of the board). He is also a member of the Supervisory Board of Urus Group LLC, member of the Supervisory Board of Damen Shipyards Group N.V. and a director of the VEUO (Vereniging van Effecten Uitgevende Organisaties). In addition, he is a Senior Advisor with private equity firm Permira and investment bank PJT Partners, and is a member of the Advisory Board of the Rotterdam School of Management, Erasmus University Rotterdam. During his professional career, he has acted as the CEO and Country Senior Partner of KPMG in the Netherlands and held a number of senior executive roles at KPMG International, including serving on the Global Executive Team and Global Board of KPMG, where he chaired KPMG’s Global Quality & Risk Committee. In the past, he has been a member of the Supervisory Board of Princess Maxima Centre for Pediatric Oncology in the Netherlands, the Supervisory Board of Stichting Alzheimer Nederland, and was the chairman of the Supervisory Boards of Van Gansewinkel Groep B.V. and Bosal Nederland B.V. Jurgen holds a Master’s degree in Business Economics at the Erasmus University in Rotterdam and has served as a lieutenant in the Royal Dutch Army.

Mark Mullen

Director

Mark is expected to join our board upon closing of this offering. Having joined Altice USA, Inc. as a director in June 2017, Mark currently serves as the Chairman of the Audit Committee and a member of the Compensation Committee of Altice USA, Inc. He is also the Co-Founder and Managing Director of Bonfire Ventures, founded in 2017, and the Managing Partner of Double M Partners, founded in 2012. Mark also founded Mull Capital in 2005. Previously, he served as the COO of the City of Los Angeles (Economic Policy) and Senior Advisor to the then-Mayor Antonio Villaraigosa where he oversaw several of the City’s assets, including the LA International Airport, LA Convention Center, and the Planning and Building & Safety Departments. Additionally, from 1993 to 2010, Mark ran the international M&A and private equity group for Daniels & Associates, an investment bank focused on the cable TV, telecom and broadband industry, and which was acquired by RBC Capital Markets in 2007. Mark holds a BSBA (cum laude honors) from the University of Denver and an MBA in international business from the Thunderbird School of Global Management.

 

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Raymond Svider

Director

Raymond is expected to join our board upon closing of this offering. Having joined Altice USA, Inc. as a director in June 2017, Raymond serves as the Chairman of the Compensation Committee and as a member of the Audit Committee of Altice USA, Inc. He is also the Chairman and a Partner of BC Partners. Over the years, Raymond has participated and led investments in a number of sectors including TMT, healthcare, industrials, business services, consumer and retail. He is currently the Chairman of the board of Chewy (NYSE “CHWY”), non-executive Chairman of PetSmart, Chairman of the Advisory Board of The Aenova Group, and also serves on the boards of GFL Environmental (NYSE/TSX “GFL”), Intelsat (NYSE “I”), Navex Global, GardaWorld, Presidio, Cyxtera Technologies and Appgate. Previously, he served as a director of Accudyne Industries, Teneo, Office Depot, Multiplan, Unity Media, Neuf Cegetel, Polyconcept, Neopost, Nutreco, UTL and Chantemur. Raymond holds an MBA from the University of Chicago and an MS in Engineering from both Ecole Polytechnique and Ecole Nationale Supérieure des Télécommunications in France.

Our Executive Officers

Jeremy Arditi

Chief Commercial Officer

Jeremy joined Teads in 2011 and currently serves as Chief Commercial Officer. Jeremy has over 14 years of experience in the digital media industry and was a co-founder of Happyapps, a digital advertising platform acquired by Teads. He began his career in the investment banking division of Morgan Stanley in New York. Jeremy holds a bachelors of science in Foreign Affairs from Georgetown University.

Caroline Barbery

Chief Financial Officer

Prior to joining Teads in 2013, Caroline worked in Corporate Investment Banking for major European banks (Fortis BNP Paribas and Natixis) for several years. In 2008, Caroline decided to combine her passion for finance and Asia by joining a French family office, Jaccar, owning funds and participations in several Asian countries. She is also an Independent Board Member and Chairman of the Audit Committee of Lafuma. Caroline holds a masters in Banking & Finance from University Paris V and a masters in Finance from ESCP Business School.

Jim Daily

Global President

Jim joined Teads in 2013 as employee number one in the Americas and currently serves as Global President/CEO North America. He started the business from a coffee shop in Brooklyn and has grown it into a powerhouse in the North American Ad Tech sector. Jim has 15 years of digital advertising experience and is an expert in video, display, branded entertainment, data and programmatic. He is very active in the North American advertising community and sits on a number of boards, including the Mobile Marketing Association. Jim holds a bachelors of science in hospitality management from Boston University.

Gilles Moncaubeig

Co-Founder and Chief Product Officer

Gilles joined Teads in 2010 and currently serves as Chief Product Officer. Before joining Teads, Gilles co-founded the leading European blogging platform OverBlog (now owned by Webedia Group) in 2004. He has 17 years of experience in digital media and advertising technologies. Gilles holds a Master of Science in Engineering from INSA Toulouse, France.

 

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Eric Pantera

Chief Technology Officer

Eric joined Teads in 2016 and currently serves as Chief Technology Officer. Eric has 17 years of experience in managing large-scale engineering operations, starting at Octo Technology (now owned by Accenture) as software architect for the media industry, while developing a patent to reduce standby power consumption of TV devices (now owned by Watt&Co). He was also CTO of the Europe’s largest professional social network platform, Viadeo. Eric holds a Master’s degree in Computer Science from EPITA Paris, France.

Eric Shih

Chief Supply Officer

Eric joined Teads in 2014 and currently serves as the Chief Supply Officer. Eric has more than 15 years of digital media business development, monetization and strategy experience. Prior to joining Teads, Eric held digital business development positions at Scripps Networks, A&E Networks and Fuse.

Todd Tran

Chief Strategy Officer

Todd joined Teads in 2015 and currently serves as Chief Strategy Officer. Todd started his career at Bain & Company as a strategy consultant. Prior to joining Teads, his 20-year career in digital advertising included serving as Apple’s iAd EMEA General Manager, Managing Director of International of Millennial Media (now owned by Verizon Media) and EMEA Managing Director of WPP’s mobile advertising agency Joule. Todd holds a bachelor’s of science in Business Administration from the University of California, Berkeley.

Ines Quesada

Chief People Officer

Ines joined Teads in 2015 and currently serves as Chief People Officer. Ines has over 20 years of experience in human resources and possesses a strong background in leading human resources for large companies. Prior to joining Teads, Ines was HR Director Wholesale EMEA for Quiksilver. Ines holds a Master of Human Resources Management from the University of Toulouse.

Meg Runeari

Chief Experience Officer

Meg joined Teads in 2015 and currently serves as Chief Experience Officer. Meg started her digital media career in 2010 at GOAL.com, purchased soon after she joined by Perform Media (now DAZN). As a Division I soccer player and captain at American University, Meg refined her leadership skills, and has spent 9 of her nearly 12 year digital media career managing multi-market teams. Meg is very active in the wider advertising community, specifically on topics of women and LGBTQ+ in technology. For her dedication, in February 2019, Meg received a Working Mother of the Year accolade from She Runs It, a leading organization promoting women’s roles in the advertising industry.

Rémi Cackel

Chief Data Officer

After an engineering degree at the University of Technology of Compiègne (France), and an MSc at Cranfield University (England), Rémi started his career in the travel advertising industry at Amadeus and Travel Audience, leading the creation and go-to-market of data solutions and personalization. Rémi joined Teads in 2017 to lead the creation of Teads data solutions and products. In his role of Chief Data Officer, he oversees the data strategy and lead regional and local data teams to support the most sophisticated needs from top clients and publishers.

 

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Corporate Governance

Controlled Company

We intend to apply for listing of the Class A Shares on Nasdaq. Our parent company, Altice International, will control more than 50% of the voting rights in the Company following the closing of this offering through the Class B Shares, and, as a result, under Nasdaq current listing standards, we qualify for and intend to avail ourselves of the controlled company exception under the corporate governance rules of Nasdaq. We intend to take advantage of the controlled company exemption, but not the exemption for foreign private issuers. We reserve our right to change our mind on either exemption at any point. As a controlled company, we will not be required to have (1) a majority of “independent directors” on our board of directors; (2) a compensation committee and a nominating and governance committee composed entirely of “independent directors” as defined under the rules of Nasdaq; or (3) an annual performance evaluation of the compensation and nominating and governance committees. Notwithstanding our intention to take advantage of the controlled company exemption, we expect to have a compensation committee initially comprised solely of independent directors. However, there is no assurance that we will continue to do so. The controlled company exception does not modify the independence requirements for the audit committee, which require that our audit committee be composed of at least three members, a majority of whom will be independent within 90 days from the date of this prospectus and each of whom will be independent within one year from the date of this prospectus. Prior to the closing of this offering, our board of directors will set up an audit committee composed of three independent directors.

Board of Directors

Our articles of association provide that we have a one-tier board of directors, consisting of executive and non-executive directors. The number of directors of our board of directors shall be determined by our board of directors. Immediately prior to the closing of this offering, our board of directors will be composed of 11 members, with two executive directors and nine non-executive directors. Jurgen van Breukelen will serve as the Chairman of our board of directors.

See “Description of Share Capital—The board of directors” for additional information.

Committees of the Board of Directors

Upon closing of this offering, we will have an audit committee and a compensation committee.

Audit Committee

Upon closing of this offering, our audit committee will be comprised of Jurgen van Breukelen, Mark Mullen and Raymond Svider and chaired by Mark Mullen. We anticipate that our board of directors will determine that each of Jurgen van Breukelen, Mark Mullen and Raymond Svider is financially literate and meets the independence requirements for directors, including the heightened independence standards for members of the audit committee under Rule 10A-3 under the Exchange Act. In addition, we anticipate that each of the audit committee members meets the independence requirements for non-executive directors under the best practice provisions of the DCGC. The composition of our audit committee is consistent with the best practice provisions of the DCGC. We anticipate that our board of directors will determine that Jurgen van Breukelen is a “financial expert” as defined by Rule 10A-3 under the Exchange Act. For a description of the education and experience of each member of the audit committee, see “—Our Directors.”

Our board of directors will establish a written charter setting forth the purpose, composition, authority and responsibility of the audit committee, consistent with Nasdaq listing requirements and the rules of the SEC, and our audit committee will review the charter annually. The principal purpose of our audit committee is

 

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to oversee the accounting and financial reporting processes and audits of the Company and to assist our board of directors in discharging its oversight of, among other things:

 

   

annually reviewing and assessing the adequacy of the audit committee charter and the performance of the audit committee;

 

   

the independence, qualifications, appointment, compensation and performance of our external auditor and the pre-approval of all non-audit services;

 

   

reviewing the adequacy of our disclosure controls and procedures, internal control over financial reporting and management’s responsibility for assessing and reporting on the effectiveness of such controls;

 

   

reviewing and approving or ratifying related-party transactions and policies related thereto;

 

   

our compliance with applicable legal and regulatory requirements and company policies;

 

   

meeting at least quarterly with our executive officers, internal audit staff and our external auditors in separate executive sessions; and

 

   

the recommendation for nomination by our board of directors for the appointment by our general meeting of an external auditor to audit the Dutch statutory board report, including its annual accounts (which include the standalone annual accounts and the consolidated annual accounts).

The audit committee will also have the authority in its sole discretion and at our expense, to retain and set the compensation of outside legal, accounting or other advisors as necessary to assist in the performance of its duties and responsibilities.

Compensation Committee

Upon closing of this offering, our compensation committee will be comprised of Jurgen van Breukelen, Mark Mullen and Raymond Svider and will be chaired by Raymond Svider. We anticipate that our board of directors will determine that each of Jurgen van Breukelen, Mark Mullen and Raymond Svider is independent for purposes of Nasdaq listing standards. Although our compensation committee will initially consist entirely of independent directors, as a “controlled company” we are not required to have an independent compensation committee and the composition of the committee may change in the future. We anticipate that each of the compensation committee members meets the independence requirements for non-executive directors under the best practice provisions of the DCGC. The composition of our compensation committee is consistent with the best practice provisions of the DCGC. For a description of the background and experience of each member of our compensation committee, see “—Our Directors.”

Our board of directors will establish a written charter setting forth the purpose, composition, authority and responsibility of the compensation committee consistent with Nasdaq listing requirements and the rules of the SEC, and our compensation committee will review the charter annually. The compensation committee’s purpose will be to assist our board of directors in its oversight of executive compensation, management development and succession, director compensation and executive compensation disclosure. The principal responsibilities and duties of the compensation committee will include, among other things:

 

   

reviewing, at least annually, our executive compensation plans;

 

   

overseeing management succession planning;

 

   

evaluating and recommending compensation and performance criteria for compensation programs for our executive directors and executive officers; and

 

   

recommending compensation for our non-executive directors.

Code of Conduct

Prior to the closing of this offering, we will adopt a code of conduct applicable to all of our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer, which is a “code of

 

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ethics” as defined in section 406(c) of the Sarbanes-Oxley Act. The code of conduct will set out our fundamental values and standards of behavior that are expected from our directors, officers and employees with respect to all aspects of our business.

If we make any amendment to the code of conduct or grant any waiver therefrom, whether explicit or implicit, to a director or executive officer, we will disclose the nature of such amendment or waiver on our website to the extent required by, and in accordance with, the rules and regulations of the SEC.

A copy of our code of conduct will be posted on our website at teads.com. The information on our website is not part of this prospectus.

Our audit committee is responsible for reviewing and evaluating the code of conduct periodically and will recommend any necessary or appropriate changes thereto to our board of directors for consideration. The audit committee will also assist our board of directors with the monitoring of compliance with the code of conduct, and will be responsible for considering any waivers of the code of conduct (other than waivers applicable to our directors or executive officers, which shall be subject to review by our board of directors as a whole).

Corporate Governance Guidelines

Our board of directors will adopt corporate governance guidelines that serve as a flexible framework within which our board of directors and its committees operate. These guidelines will cover a number of areas, including the size and composition of the board, board membership criteria and director qualifications, director responsibilities, board agenda, roles of Chairman, Vice-Chairman, President and Vice-President of the board of directors, meetings, director access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation and management succession planning. Our board of directors, or a committee thereof, will review our corporate governance guidelines periodically. Additionally, our board of directors will adopt independence standards as part of our corporate governance guidelines.

A copy of our corporate governance guidelines will be posted on our website at teads.com. The information on our website is not part of this prospectus.

Diversity

Our commitment to diversity and inclusiveness is a defining feature of our culture. We recognize the importance and benefit of having a board of directors and senior management comprised of highly talented and experienced individuals having regard to the need to foster and promote diversity among directors and senior management with respect to attributes such as gender, ethnicity, cultural background and other factors.

Prior to the closing of this offering, we will adopt a diversity policy that promotes our commitment to diversity and that will set specific diversity targets and specify diversity aspects relevant for the Company, such as nationality, age, gender identity, background and expertise.

Teads Compensation

As a foreign private issuer, we will comply with home country compensation disclosure requirements and certain exemptions thereunder rather than the SEC disclosure requirements applicable to U.S. domestic issuers.

We were incorporated pursuant to the laws of the Netherlands as Altice Temp B.V. on May 14, 2021, were renamed Teads B.V. on July 2, 2021 and will be converted into a public company and renamed Teads N.V. prior to the closing of this offering. Since Teads B.V. did not yet exist in 2020, Teads B.V. did not have, and did not pay any compensation to, any executive officers or directors in 2020. The aggregate amount of compensation our key management (including executive officers and directors) received from our predecessors for service to manage

 

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our business for the year ended December 31, 2020 was approximately $5,249,614, including amounts set aside or accrued to provide pension, retirement or similar benefits to these individuals in this capacity. An aggregate of approximately $47,228,201 is anticipated to be paid as compensation (assuming payment of bonuses at 100% of target for the portion subject to performance-based metrics) and set aside for pension, retirement, or similar benefits to our directors and our executive officers for the year ending on December 31, 2021.

Our board of directors, upon a recommendation of the compensation committee, is authorized to determine the amount, level and structure of the remuneration of our executive officers who are not directors. Our general meeting, on the proposal of our board of directors, determines the remuneration of our directors, both executive and non-executive directors, in accordance with our remuneration policy, which will be adopted by the general meeting prior to the closing of this offering and is described further below. Both our executive officers and our directors are eligible to receive equity awards under the 2021 SOP, which will be adopted by the board of directors and the general meeting prior to the closing of this offering and is described further below.

Remuneration Policy for Executive and Non-Executive Directors

The Teads N.V. Remuneration Policy for executive and non-executive directors (our “remuneration policy”) provides a policy and framework for the payment of executive and non-executive director compensation in accordance with Dutch law. The Company’s general meeting on the proposal of our board of directors, and based on a recommendation of the compensation committee, determines the amount, level and structure of the compensation packages of our directors in accordance with our remuneration policy. Under our remuneration policy, directors may be eligible for a mix of fixed and variable compensation components, including short and long-term incentives, fringe benefits, and pension arrangements. The remuneration of non-executive directors is generally based on fixed annual remuneration. Both executive directors and non-executive directors can be compensated with equity-based incentives, and the Company will reimburse both executive and non-executive directors for certain liabilities incurred as a result of performing their duties. Neither executive directors nor non-executive directors are eligible for any personal loans or guarantees under our remuneration policy.

Compensation of our Executive and Non-Executive Directors

Consistent with our decision to comply with home country compensation disclosure requirements and certain exemptions thereunder, the following table sets forth the compensation expected to be provided to each of our executive and non-executive directors for the year ending December 31, 2021, in accordance with our remuneration policy.

 

Name

   Salary
($)(1)
     Bonus
($)(1)
     All Other
Compensation
($)(1)
     Total
Compensation ($)(1)(2)
 

Executive Directors

           

Pierre Chappaz

     155,442        20,698,536        18,912        20,872,891  

Bertrand Quesada

     583,594        20,852,767        25,730        21,462,091  

Non-Executive Directors

           

Malo Corbin

     45,750                      45,750  

David Drahi

     61,000                      61,000  

Graziella Drahi

     45,750                      45,750  

Dexter Goei

     45,750                      45,750  

Tal Granot-Goldstein

     45,750                      45,750  

Natacha Marty

     45,750                      45,750  

Mark Mullen

     61,000                      61,000  

Raymond Svider

     55,917                      55,917  

Jurgen van Breukelen

     70,735                      70,735  

 

  (1)

Amounts in this table are shown in USD, and are calculated using an exchange rate of one euro to 1.22 USD, one Swiss Franc to 1.12 USD and one Pound Sterling to 1.35 USD, as applicable. Bonus amounts assume payout of 100% of target for the portion subject to performance-based metrics.

 

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  (2)

Consistent with home country compensation disclosure requirements and certain exemptions thereunder, this compensation disclosure does not include the value of equity awards that will be granted to our executive and non-executive directors. For information regarding equity awards to be granted to our directors, see “—Equity Awards of our Executive and Non-Executive Directors.”

Equity Awards of our Executive and Non-Executive Directors

Our executive and non-executive directors are eligible to receive equity awards in the form of stock options under the 2021 SOP, see “—Stock Option Plan” for further information regarding the 2021 SOP. Subject to the closing of this offering, our executive directors will be granted stock options with an exercise price equal to the initial public offering price and with respect to the following number of Class A Shares: Pierre Chappaz (9,068,508 Class A Shares); and Bertrand Quesada (4,534,254 Class A Shares). These awards are eligible to vest following assessment of performance criteria during a period beginning on January 1, 2023 and ending on December 31, 2023 and subject to continued service.

Share Ownership of our Executive and Non-Executive Directors

For information on the ownership of our directors in our Class A Shares, see “Principal and Selling Shareholders.”

Services Agreements

Each of the directors will have a services agreement with the Company. These services agreements will provide for a notice of termination period of one month, payment of certain out-of-pocket expenses in addition to the remuneration granted in their capacity as director and restrictive covenants, including covenants related to confidentiality and return of documents and property of the Company.

The directors may also have an employment or services agreement with the Company or another company within the Altice group.

Bonus Payments

Pierre Chappaz and Bertrand Quesada are in connection with their appointment as executive directors of the Company, each being granted a one-time bonus of $20.6 million by the Company pursuant to agreements entered into on July 5, 2021. These one-time bonuses will be paid by the Company in May 2022.

With respect to the one-time bonus of Pierre Chappaz, the Company will gross up the one-time bonus for all Dutch income taxes that will become due by him and all Dutch wage withholding taxes to be withheld by the Company on his behalf in connection with this bonus. Based on the Dutch maximum statutory progressive income and wage tax rate of 49.50%, the total amount to be paid by the Company in respect of Pierre Chappaz may be up to $41 million. The Company and Pierre Chappaz will file an application with the Dutch Revenue Service for the purpose of designating 30% of the appointment bonus as tax-exempt wages, which, if granted, may reduce the total amount of the cost with respect to the one-time bonus of Pierre Chappaz to no more than $35 million.

In addition, Pierre Chappaz participated in the Company’s performance-based bonus program through April 2021, and Bertrand Quesada participated and continues to participate in the Company’s performance-based bonus program, which is paid quarterly in 2021 and will be paid annually in 2022. The performance metrics are based on EBITDA and revenue.

Stock Option Plan

The 2021 SOP will be approved by our board of directors and adopted by our general meeting with effect as of the effectiveness of the registration statement of which this prospectus forms a part. Under the 2021 SOP, certain of our directors, officers and employees will be granted stock options with an exercise price equal to the

 

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initial public offering price with respect to an aggregate of 23,816,700 Class A Shares (which number includes the grants to our executive directors described above). If the closing of the Company’s initial public offering does not occur, the 2021 SOP will automatically terminate and any award granted pursuant to the 2021 SOP will be canceled for no consideration without any further action from the Competent Body (as defined below).

Under the 2021 SOP, we may grant awards of stock options or other awards to officers, employees, consultants and directors. The purpose of the 2021 SOP is to enhance Teads N.V. and its subsidiaries’ ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Teads N.V. and its subsidiaries and to further the best interests of the Company, its business and its stakeholders. A copy of the 2021 SOP is attached as an exhibit hereto and the following summary is qualified in its entirety by reference thereto.

Authority and Administration

The board of directors will have the full power and authority to make and amend grants to participants other than directors, subject to applicable law and the terms of the 2021 SOP. The Company’s general meeting on the proposal of our board of directors, and based on a recommendation of the compensation committee, will have the full power and authority to make and amend grants to directors. The board of directors and the general meeting may delegate (part of) their authority to a committee of the board of directors, which may be the compensation committee, or to one or more other persons (the board of directors or its delegate and, in the case of director awards, the general meeting or its delegate are referred to in this prospectus as the “Competent Body”).

Subject to applicable law and the terms of the 2021 SOP, the Competent Body may, among other things, determine: (i) the eligible participants; (ii) the number of Class A Shares subject to each award; and (iii) the terms and conditions of each award, including, without limitation, those related to term, permissible methods of exercise, vesting, cancellation, forfeiture, payment, settlement, exercisability, performance periods, performance targets, and the effect or occurrence, if any, of a participant’s termination of employment, separation from service or leave of absence with the Company or any of its subsidiaries or of a change of control of the Company. The Competent Body will administer the 2021 SOP upon the closing of the offering.

Limitation on Awards and Shares Available

The maximum aggregate number of shares that may be issued for all purposes under the 2021 SOP will be equal to 28,678,138 Class A Shares (the “Plan Limit”). Class A Shares issued pursuant to awards under the 2021 SOP may be either authorized and unissued Class A Shares, Class A Shares held by the Company in its treasury, or a combination thereof. The number of Class A Shares remaining available for issuance shall be reduced by the number of Class A Shares subject to outstanding awards and, for awards that are not denominated by shares, by the number of Class A Shares actually delivered upon settlement or payment of the award. For purposes of determining the number of Class A Shares that remain available for issuance under the 2021 SOP, the number of Class A Shares corresponding to awards under the 2021 SOP that are forfeited or cancelled or otherwise expire for any reason without having been exercised or settled or that are settled through the issuance of consideration other than Class A Shares (including, without limitation, cash) shall be added back to the Plan Limit and again be available for the grant of awards. In addition, (i) the number of Class A Shares that are tendered by a participant or withheld by the Company to pay the exercise price of an award or to satisfy the tax withholding obligations in connection with the vesting, exercise or settlement of an award and (ii) the number of Class A Shares subject to an option but not issued or delivered as a result of the net settlement of such option shall be added back to the Plan Limit and again be available for the grant of awards. No participant may be granted under the 2021 SOP in any fiscal year awards covering more than 10,000,000 Class A Shares.

Awards

Awards under the 2021 SOP may consist of options or other awards. Any award may be granted singly or in combination or in tandem with any other award. Vesting criteria will be set with respect to each award granted under the 2021 SOP, which, depending on the extent to which the criteria are met, will determine the extent to

 

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which the award becomes exercisable or the number of Class A Shares or the amount of cash that will be distributed or paid out to the participant with respect to the award. An award’s vesting criteria may be based upon performance, including the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment or provision of services). The terms and conditions of each award will be set forth in an award document. The award document will contain terms and conditions not inconsistent with the 2021 SOP and the resolution of the Competent Body to grant the award. The Competent Body may at any time following grant (i) accelerate the vesting, exercisability, lapse of restrictions, settlement or payment of any award, (ii) eliminate the restrictions and conditions applicable to an award or (iii) extend the post-termination exercise period of an outstanding award (subject to the limitations of Section 409A of the Code). No awards may be granted under the 2021 SOP after the 10th anniversary of the 2021 SOP’s effective date.

Participants may be granted the right to receive dividends or payments equivalent to dividends or interest with respect to an award, which payments can either be paid currently or deemed to have been reinvested in Class A Shares (to the extent compliant with applicable laws), and can be made in Class A Shares, cash or a combination thereof. No dividends or dividend equivalents will be paid with respect to options. In the event of a stock split, reverse stock split, stock dividend, recapitalization, reorganization, partial or complete liquidation, reclassification, merger, consolidation, separation, extraordinary stock or cash dividend, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase shares at a price substantially below fair market value, or any other corporate event or distribution of stock or property of the Company affecting the shares, the Competent Body will adjust the number and kind of shares authorized for issuance and the number and kind of shares subject to any outstanding award and the exercise price per share, if any, under any outstanding award in order to materially preserve, but not increase, the benefits or potential benefits intended to be made available to participants under the 2021 SOP.

Stock Options

A stock option is the right to acquire Class A Shares at a fixed exercise price for a fixed period of time. Under the 2021 SOP, the Competent Body may grant nonqualified stock options and “incentive stock options” (as defined in Section 422 of the Code) pursuant to stock option agreements, determine the number of Class A Shares covered by each option and set the vesting schedule and exercise price of the Class A Shares subject to each option, which generally cannot be less than 100% of the fair market value on the date of grant to the extent necessary to comply with Section 409A of the Code. Stock options granted under the 2021 SOP will vest at the rate specified in the stock option agreements. A stock option granted under the 2021 SOP generally cannot be exercised until it becomes vested. No incentive stock option may have an exercise price that is less than 100% of the fair market value on the date of grant.

No incentive stock option may be issued to any individual who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, unless (i) the exercise price is at least 110% of the fair market value on the date of grant of the Class A Shares subject to such incentive stock option and (ii) the incentive stock option is not exercisable more than five years from the date of grant. The aggregate fair market value of the Class A Shares, determined on the grant date, covered by incentive stock options, which first becomes exercisable by any participant during any calendar year, may not exceed $100,000. Any grants in excess of this limit shall be treated as nonqualified stock options.

The exercise price of the Class A Shares subject to each option may be paid, among other means, in cash or cash equivalents, by actual delivery or attestation to ownership of freely transferable Class A Shares already owned by the person exercising the stock option, a combination of cash and shares equal in value to the exercise price, through net share settlement or similar procedure involving the withholding of Class A Shares subject to the stock option with a value equal to the exercise price. In-the-money stock options may be required to be exercised automatically, with no action required on the part of a participant, using a net share settlement or similar procedure immediately (or shortly) before their scheduled expiration date where participants are precluded from using other methods of exercise due to legal restrictions or Company policy (including policies on trading in shares).

 

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Other Awards

The Competent Body has the authority to establish the terms and provisions of other forms of awards that the Competent Body determines to be consistent with the purpose of the 2021 SOP and the interests of the Company. Such awards may be made subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances.

Change in Control

In the event of a “change in control,” the Competent Body may take any action it deems necessary or desirable in its sole discretion with respect to any award that is outstanding, including, without limitation: (i) the acceleration of the vesting, settlement and/or exercisability of an award; (ii) the payment of a cash amount in exchange for the cancellation of an award; (iii) the cancellation of options without the payment of consideration therefor if the exercise price of such options equals or exceeds the price paid for a Class A Share in connection with the “change in control”; (iv) the cancellation of any unvested awards without the payment of consideration therefor and (v) the issuance of substitute awards that substantially preserve the value, rights and benefits of any affected awards.

Limited Transferability of Awards

A participant’s rights and interests under the 2021 SOP, including any award previously made to such participant or any amounts payable under the 2021 SOP may not be assigned, pledged, or transferred, except, in the event of the participant’s death, to a designated beneficiary in accordance with the 2021 SOP, or in the absence of such designation, by will or the laws of descent or distribution or, except in the case of an incentive stock option, pursuant to a domestic relations order. Subject to the terms of the 2021 SOP and applicable laws, rules and regulations, an award may be transferred for no consideration to a permitted transferee.

Amendment and Termination of the 2021 SOP

The board of directors may at any time terminate or, from time to time, amend, modify or suspend the 2021 SOP. No termination, amendment, modification or suspension will be effective without the adoption of our general meeting if such adoption is required under applicable laws, rules and regulations. The Competent Body has broad authority to amend any award under the 2021 SOP without the consent of a participant to the extent it deems necessary or desirable, including to comply with, or take into account changes in, or interpretations of, applicable tax laws, securities laws, employment laws, accounting rules and other applicable laws, rules and regulations, including without limitation, to avoid, in the reasonable, good faith judgment of the Company, the imposition on any participant of any tax, interest or penalty under Section 409A of the Code, or to take into account unusual or nonrecurring events or market conditions (including, without limitation, events that affect changes in capitalization).

Summary of U.S. Federal Income Tax Consequences

The following summary of tax consequences to the Company and to the 2021 SOP participants is not intended to be used as tax guidance to participants in the 2021 SOP. It relates only to U.S. federal income tax and does not address state, local or foreign income tax rules or other U.S. tax provisions, such as estate or gift taxes. Different tax rules may apply to specific participants and transactions under the 2021 SOP, particularly in jurisdictions outside the U.S. In addition, this summary is as of the date of this prospectus; federal income tax laws and regulations are frequently revised and may be changed again at any time. Therefore, each participant is urged to consult a tax advisor upon receipt of any award under the 2021 SOP and before exercising any award or before disposing of any Class A Shares acquired under the 2021 SOP.

Nonqualified Stock Options. The grant of an option will create no tax consequences at the grant date for the participant or the Company. Upon exercising a nonqualified stock option, the participant will

 

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generally recognize ordinary income equal to the excess of the fair market value of the shares acquired on the date of exercise over the exercise price. A participant’s disposition of shares acquired upon the exercise of a nonqualified stock option generally will result in long- or short-term capital gain or loss measured by the difference between the sale price and the participant’s tax basis in such shares (the tax basis in the acquired shares generally being the exercise price plus any amount recognized as ordinary income in connection with the exercise of the option).

Incentive Stock Options. A participant will have no taxable income upon the grant or exercise of an incentive stock option, except that the alternative minimum tax may apply upon exercise. Upon a disposition of shares acquired by exercise of an incentive stock option before the end of the statutory incentive stock option holding periods (generally, two years from grant and one year from exercise), the participant generally will recognize ordinary income equal to the lesser of (i) the fair market value of the shares at the date of exercise minus the exercise price or (ii) the amount realized upon the disposition of the shares minus the exercise price. Otherwise, a participant’s disposition of shares acquired upon the exercise of an incentive stock option for which the incentive stock option holding periods are met generally will result in long-term capital gain or loss measured by the difference between the sale price and the recipient’s tax basis in such shares (the tax basis in the acquired shares for which the incentive stock option holding periods are met generally being the exercise price of the incentive stock option).

Other Awards. Other awards under the 2021 SOP generally will result in ordinary income to the participant at the later of the time of delivery of cash, shares, or other awards, or the time that the risk of forfeiture lapses.

Company Deduction. Under US tax principles, to the extent the Company or its subsidiaries are eligible, a deduction would be available with respect to amounts that are recognized as ordinary income by the participants (but not amounts that are treated as capital gains).

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the director and executive officer compensation arrangements discussed above in the section entitled “Management—Teads Compensation,” this section describes transactions, or series of related transactions, since January 1, 2018 to which we were a party or will be a party, in which:

 

   

the amount involved exceeded or will exceed $120,000; and

 

   

any of our directors, executive officers or beneficial owners of more than 5% of any class of our capital stock (each, a “5% Holder”), or any members of the immediate family of, and any entity affiliated with, any such person, had or will have a direct or indirect material interest.

Graziella Drahi and David Drahi, both of whom will serve on our board of directors upon closing of this offering, are related to each other and related to Patrick Drahi, founder of the Altice group and controlling shareholder of Altice International. Bertrand Quesada, co-founder, director and CEO, and Ines Quesada, Chief People Officer, are siblings.

Registration Rights Agreement

In connection with this offering, we expect to enter into a registration rights agreement with Altice International and our founders. This agreement will provide to Altice International an unlimited number of “demand” registrations for the registration of the sale of our Class A Shares in the minimum aggregate amount of $75,000,000 provided that Altice International holds at least 10% of the registrable securities then outstanding. Additionally, the agreement will provide customary “piggyback” registration rights to Altice International and our founders. We will be obligated to file a shelf registration statement upon request by Altice International once we are eligible to register on Form F-3. Our founders will be able to request participation in any registrations in which Altice International participates. The registration rights agreement will also provide that we will pay certain expenses relating to such registrations and indemnify Altice International and any other selling shareholders against certain liabilities which may arise under the Securities Act.

Ongoing Relationship with the Altice Group and the Altice USA, Inc. Group

On September 23, 2019, Teads France S.A.S, Teads Ltd., Teads Inc., Teads Italia S.r.l. and Teads Espana SLU signed a cash management agreement with Altice Teads S.A., with effect as of April 1, 2018, to establish a cash management system to avoid retaining costly financial fixed assets and to promote the coordinated and optimal use of surplus cash or to cover cash requirements globally among themselves for an unlimited period of time. Teads S.A., Teads Japan K.K., Teads Deutschland Gmbh and Teads Latam LLC subsequently adhered to this cash management agreement. For the years ended December 31, 2020 and December 31, 2019, the amounts lent to Altice Teads S.A. by the Teads S.A. subsidiaries were $64 million and $32 million, respectively. This agreement is expected to be terminated prior to the closing of this offering.

Teads Inc. has a partnership with a4 Media, LLC for the U.S., acting as an agent in the U.S. and Teads Espana SLU has an agreement with MEO - Serviços de Comunicaçoes e Multimedia, S.A. covering the Portuguese market. a4 Media, LLC and MEO - Serviços de Comunicaçoes e Multimedia S.A. support Teads Inc. and Teads Spain SLU in their business development, either in specific verticals or countries (e.g. Portugal). Their remuneration as agent is based on a revenue sharing, in line with the market practice. SFR S.A. has been and continues to be a customer of Teads France S.A.S.

Teads France S.A.S. signed minimum guarantee contracts with several Altice group entities in 2019 (including Next Media Solutions S.A.S., Groupe L’Express S.A. and Libération SARL) and in 2020 (including Next Media Solutions S.A.S.). Thanks to these minimum guarantee contracts, Teads France S.A.S can get access to the inventory of Altice group entities at a pricing in line with the market practice.

Teads B.V. entered into two interest bearing facility agreements with Altice International, each dated July 14, 2021 with an effective date of June 30, 2021, for (i) $1,000,000, from which $25,500 has been drawn as

 

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of June 30, 2021, and (ii) for €1,000,000 from which €370,000 has been drawn as of June 30, 2021, in order to finance expenses related to this offering.

Relationship with Certain Team Members

Altice Teads S.A. previously made a loan for €2,000,000 to Pierre Chappaz which was repaid in full on June 15, 2021. The amount repaid consisted of the €2,000,000 principal and €5,888.89 in interest.

Policy Concerning Related Person Transactions

Prior to the closing of this offering, our board of directors will adopt a written policy, which we refer to as the related party transactions policy, for the review and approval by our audit committee of any transaction between us or one of our subsidiaries and (i) one of our directors or executive officers (or their close family members or entities in which they or a close family member has at least a 5% interest or serves as a management or supervisory board member) or (ii) a shareholder that owns at least 5% of our total equity or the total equity of one of our subsidiaries or otherwise has a significant influence over us, in each case if the amount involved exceeds $120,000 or the transaction is otherwise significant.

Pierre Chappaz Fee

The Company and Pierre Chappaz have agreed that Pierre Chappaz will be entitled to a one-time fee of $35.3 million because of the key role he has played in connection with this offering. This one-time fee will be paid by the Company in October 2022.

With respect to this fee, the Company does not expect that any Dutch income taxes, any Dutch wage withholding taxes or any value added taxes will be due. If, however, any Dutch income taxes would be due by Pierre Chappaz or any Dutch wage withholding taxes would have to be withheld by the Company on his behalf in connection with this fee, the Company will gross up the one-time fee to cover such taxes and, as the case may be, any related costs (including but not limited to late payment interest and penalties). In addition, if any value added taxes would be due in connection with the Pierre Chappaz Fee, the Company will bear such value added taxes itself as well as any related costs; it is uncertain what part, if any, of such value added tax charges would be recoverable by the Company. The Dutch maximum statutory progressive income and wage tax rate is 49.50% and the general Dutch value added tax rate is 21%. As a consequence, the total amount to be paid by the Company may be up to $70 million (excluding any possible related costs) plus any non-recoverable Dutch value added taxes.

 

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PRINCIPAL AND SELLING SHAREHOLDERS

The following table presents certain information as of July 10, 2021 with respect to the beneficial ownership of our Common Shares, and as adjusted to give effect to the corporate reorganization and sale of Class A Shares offered by the selling shareholders in this offering, assuming no exercise and full exercise of the underwriters’ option to purchase additional Class A Shares, by:

 

   

each person known by us to beneficially own more than 5% of our Class A Shares;

 

   

each of our directors;

 

   

each of our executive officers;

 

   

all of our executive officers and directors as a group; and

 

   

each selling shareholder.

We have based the percentage ownership of our Common Shares before this offering on 66,866,544 Class A Shares and 171,228,696 Class B Shares outstanding based on an assumed initial public offering price of $19.50 and completion of the corporate reorganization. Percentage ownership of our Common Shares after this offering (assuming no exercise of the underwriters’ option to purchase additional Class A Shares) also assumes the sale by the selling shareholders of 38,500,000 Class A Shares in this offering. Percentage ownership of our Common Shares after this offering (assuming full exercise of the underwriters’ option to purchase additional Class A Shares) also assumes the sale by the selling shareholders of an additional 5,775,000 Class A Shares. The number of shares beneficially owned by each shareholder is determined under rules issued by the SEC and includes voting or investment power with respect to securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power. In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, Class A Shares subject to equity awards or other rights held by such person that are currently exercisable or will become exercisable within 60 days after July 10, 2021 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. Each of the shareholders listed has sole voting and investment power with respect to the shares beneficially owned by the shareholder unless noted otherwise, subject to community property laws where applicable.

This table does not include any options grants under the 2021 SOP, none of which are currently exercisable or exercisable within 60 days of the date of this table, See “Teads Compensation—Stock Option Plan” for more information on the 2021 SOP. The number of shares received by the beneficial owners and selling shareholders in the corporate reorganization is dependent on the offering price; therefore, the numbers in the table below may change by an immaterial amount.

 

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    Shares Beneficially
Owned Before
this Offering (1)
    % Total
Voting
Power
Before
This
Offering
    Shares
Being
Offered
(Assuming
No
Exercise
of

Option)
    Shares Beneficially
Owned
After this Offering
(Assuming No Exercise of Option)
    % Total
Voting
Power
After This
Offering
(2)
(Assuming
No
Exercise
of

Option)
    Number
of Shares
Being
Offered
(Assuming
Full
Exercise
of Option)
    Shares Beneficially
Owned
After this Offering
(Assuming Full Exercise
of Option)
    % Total
Voting
Power
After this
Offering
(Assuming
Full
Exercise
of

Option)
 
  Class A     Class B     Class A     Class B     Class A     Class B  
  Number     %     Number     %     Number     %     Number     %     Number     %     Number     %  

5% Stockholders

                                 

Altice International (1)(2)

    33,028,410       49.4     171,228,696       100.0     99.2     33,028,410       —         0.0     171,228,696       100.0     98.5     37,982,671       —         —         166,274,375       100.0     98.3

Executive Officers and Directors

                                 

Pierre Chappaz

    10,578,442       15.8     —         —         *       1,710,536       8,867,906       13.3     —         —         *       1,967,116       8,611,326       12.0     —         —         *  

Bertrand Quesada

    3,860,984       5.8     —         —         *       624,321       3,236,663       4.8     —         —         *       717,969       3,143,015       4.4     —         —         *  

Gilles Moncaubeig(3)

    1,943,213       2.9     —         —         *       314,217       1,628,996       2.4     —         —         —         361,349       1,581,864       2.2     —         —         —    

Eric Pantera(3)

    668,351       1.0     —         —         *       108,072       *       *       —         —         —