Outbrain completes Nasdaq IPO at disappointing $1.12 billion valuation

Outbrain completed its IPO on Thursday, raising $160 million at a $1.12 billion valuation. The internet recommendation company had announced last week that it planned to raise approximately $200 million at a $1.4 billion valuation in its initial public offering on Nasdaq. However, its hope of selling 8,000,000 shares at a price of between $24-26 per share proved to be unrealistic, and it had to settle for a much lower valuation, especially considering it was hoping for a $2 billion valuation earlier this year.

Outbrain announced earlier this month that it had secured $200 million in funding from Boston-based investment manager The Baupost Group.

The Baupost Group is a Boston-based investment manager which manages roughly $31 billion, investing in a wide range of asset classes, including significant holdings in publicly traded debt and equity securities, private debt, real estate, and private equity. CEO and Portfolio Manager Seth Klarman has overseen Baupost’s investments from the company’s inception in 1982.

Outbrain grew at a rate of 29% in the first quarter of 2021 and posted revenue of $228 million.

Unlike most Israeli companies currently traded in New York, Outbrain posted a bottom-line profit of $10.7 million in 2021’s first quarter. In the same quarter in 2020, Outbrain posted revenue of $177.3 million and lost $9.5 million. The company showed cash balances of $95 million as of the end of the first quarter of 2021.

Outbrain ended 2020 with revenue of $767.1 million, and a relatively moderate growth rate of 11% as a result of the slowdown in the first half of the year due to the coronavirus outbreak. However, it showed an operating profit of $10 million for the first time, compared to a loss of $4.5 million in 2019. Ultimately, Outbrain posted a net profit of $4.4 million compared to a loss of $20.5 million the previous year.

Outbrain was founded by brothers Yaron and Eytan Galai. Yaron Galai serves as co-CEO with David Kostman (who is also NICE chairman - SSH). Before the IPO, he was appointed chairman of the company. Ori Lahav serves as VP of technology.