IAS Q2 Deep Dive: AI-Driven Product Expansion and Global Partnerships Fuel Growth

August 12, 2025 at 03:08 AM EDT

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Ad verification company Integral Ad Science (NASDAQ: IAS) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 15.7% year on year to $149.2 million. Guidance for next quarter’s revenue was better than expected at $149 million at the midpoint, 0.6% above analysts’ estimates. Its non-GAAP profit of $0.16 per share was in line with analysts’ consensus estimates.

Is now the time to buy IAS? Find out in our full research report (it’s free).

Integral Ad Science (IAS) Q2 CY2025 Highlights:

Revenue: $149.2 million vs analyst estimates of $143.7 million (15.7% year-on-year growth, 3.8% beat)
Adjusted EPS: $0.16 vs analyst estimates of $0.17 (in line)
Adjusted Operating Income: $39.8 million vs analyst estimates of $10.55 million (26.7% margin, significant beat)
The company lifted its revenue guidance for the full year to $601 million at the midpoint from $595 million, a 1% increase
EBITDA guidance for the full year is $211 million at the midpoint, above analyst estimates of $206.5 million
Operating Margin: 14%, up from 11% in the same quarter last year
Market Capitalization: $1.48 billion

StockStory’s Take

Integral Ad Science delivered a quarter that exceeded Wall Street’s expectations, driven by robust adoption of its AI-enabled ad verification and optimization solutions across key channels. Management pointed to strong momentum in connected TV (CTV) and social measurement offerings, with CEO Lisa Utzschneider highlighting expanded partnerships and wins in international markets. Utzschneider credited ongoing investment in artificial intelligence infrastructure and enhanced product offerings as central to the company’s ability to secure new customers and deepen existing relationships. Notably, Prebid Social Optimization and new CTV solutions contributed significantly to customer retention and growth, while recent partnerships, such as the two-year expansion with Samsung and new agreements in EMEA and APAC, underpinned the quarter’s outperformance.

Looking ahead, Integral Ad Science’s updated outlook is shaped by continued investment in AI-driven product development and global expansion initiatives. Management emphasized the potential for further growth in optimization and publisher segments, as well as ongoing opportunities to upsell recently acquired Oracle customers. CFO Alpana Wegner noted that the company expects gross margin improvements and operational efficiencies in the second half of the year, while Utzschneider stated, “We believe there is significant runway for growth as we scale product adoption, add new customers and partners, and deepen existing relationships.” Management also highlighted the expansion of social measurement capabilities and new strategic partnerships, such as with Meta and Lyft, as key to driving future adoption and revenue.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to rapid customer adoption of new AI-powered solutions and expansion in CTV and social platforms, supported by strategic integrations and international momentum.

AI-powered product adoption: Integral Ad Science’s investments in generative AI and automation enabled faster, more precise model validation and product launches. The company highlighted that up to 97% of model validation now uses AI, increasing speed and accuracy across its offerings.
CTV growth and partnerships: CTV remained the fastest-growing digital advertising channel, with strong contributions from Publica products and new partnerships. A two-year expansion with Samsung and deals in EMEA and APAC, such as with SBS Australia, were cited as key growth drivers.
Social measurement momentum: There was significant adoption of Prebid Social Optimization and TMQ (Total Media Quality) products, particularly among global brands and in international markets. The partnership with Meta was deepened through expanded measurement capabilities, including a new test for ThreadsFeed.
Publisher segment strength: The publisher business posted 36% growth, driven by expanded OEM partnerships and adoption of CTV products. International wins and new mid-market integrations, such as with StackAdapt, broadened the customer base and product reach.
Oracle customer integration: The company continued to onboard and upsell customers acquired from Oracle’s Moat business, with a focus on cross-selling optimization solutions. Management noted high renewal rates and ongoing contributions from these accounts.

Drivers of Future Performance

Integral Ad Science’s outlook is driven by the expectation that AI-powered product expansion and international growth will sustain momentum, while operational efficiencies support profit margins.

Optimization and publisher segment expansion: Management expects continued mid-teens growth in optimization revenue and double-digit growth in the publisher segment, fueled by adoption of performance-focused products and CTV solutions. The shift in advertiser spend toward channels promising higher ROI is anticipated to support ongoing demand.
International and platform partnerships: The company is investing in international markets, with particular focus on EMEA and APAC, and expanding partnerships with major digital platforms like Meta, Snap, and Lyft. These collaborations are expected to drive adoption of measurement and optimization products globally, while the China beta program is opening new opportunities in a key emerging market.
Profitability and operational efficiency: CFO Alpana Wegner cited expectations for gross margin improvement in the second half of the year, supported by seasonality and efficiency gains. However, management acknowledged that growth rates may be tempered by timing of advertiser campaigns and the need to balance investment in technology and go-to-market teams.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be tracking (1) further adoption and upselling within the Oracle customer base, (2) the impact of expanded partnerships and product integrations with platforms such as Meta, Lyft, and StackAdapt, and (3) sustained growth in the publisher and optimization segments, especially as new CTV and social products are rolled out globally. Execution on international expansion plans and continued gross margin improvement will also be key signposts for ongoing performance.

Integral Ad Science currently trades at $8.93, up from $7.95 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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