Taboola.com Ltd. (TBLA) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.The upward trend in estimate revisions for this company reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends ...

Summary of Taboola.com (TBLA) FY Conference Call - May 13, 2025 Company Overview - **Company**: Taboola.com (TBLA) - **Industry**: Performance Advertising - **Core Business**: Taboola is a leading global performance advertising platform that helps businesses place performance ads across the open internet, leveraging unique data and AI to target ads effectively [7][8][9]. Financial Projections - **2025 Revenue Projection**: Expected to achieve approximately $1.9 billion in revenue [10]. - **EBITDA Margin Target**: Aiming for 30% EBITDA margins, translating to about $211 million to $212 million in adjusted EBITDA [10]. - **Free Cash Flow Conversion**: Targeting a conversion rate of 50% to 60% of adjusted EBITDA to free cash flow, with expectations to be closer to the 60% end [10]. New Product Launch - **Realize Platform**: Introduction of a new advertising platform that expands beyond native advertising to include display ads and vertical video ads, allowing performance advertisers to achieve their goals across various media formats [11][12]. Market Position and Strategy - **Addressable Market Expansion**: The company aims to capture a larger share of the display ad market, which is three times larger than the native ad market [13]. - **Performance vs. Branding**: Emphasizes the difference between performance advertising (specific goals like CPA and CPL) and branding advertising, noting a gap in the market for automated performance advertising solutions [14][15][16]. - **Unique Data Advantage**: Taboola's data is derived from being hard-coded on publisher pages, providing a unique targeting capability that competitors may struggle to replicate [28][29]. Competitive Landscape - **End-to-End Solution**: Taboola operates as both a Demand-Side Platform (DSP) and Supply-Side Platform (SSP), providing a competitive edge in the open internet space [26][27]. - **Response to Competitors**: Acknowledges competition from other DSPs and SSPs but believes its unique data and direct relationships with advertisers and publishers provide a significant advantage [27][30]. Generative AI and Technology Integration - **Generative AI Utilization**: The company is integrating generative AI to enhance internal productivity and improve customer experience through tools like Abby, a self-service generative AI assistant for advertisers [70][72][123]. - **Deep Learning AI**: Continues to invest in deep learning AI to optimize ad targeting and improve revenue per ad spot [118][120]. Capital Allocation and Financial Strategy - **Share Buybacks**: The primary focus for excess cash flow is on aggressive share buybacks, with over $90 million repurchased in the first quarter and a half of the year [105]. - **M&A Strategy**: Plans to pursue smaller, tuck-in acquisitions rather than large-scale mergers, while also considering debt repayment as a lower priority following a recent refinancing [106][107]. Yahoo Integration and Performance - **Impact of Yahoo Deal**: The acquisition of Yahoo has significantly increased adjusted EBITDA and free cash flow, although some expected demand sources have not materialized as quickly as anticipated [94][96]. - **Brand Advertiser Engagement**: The company has successfully transitioned several large brand advertisers to its platform, although some have opted to remain exclusive to Yahoo supply [96][97]. Future Outlook - **Focus on Incremental Demand**: Plans to bring in new forms of demand and verticalize the sales team to better serve specific industries [48][49]. - **CTV Opportunities**: Exploring potential in Connected TV (CTV) advertising, particularly in connecting video ads to performance outcomes [36][37]. Key Takeaways - Taboola is positioning itself as a leader in performance advertising by leveraging unique data and AI technology to meet the evolving needs of advertisers. - The company is focused on expanding its market reach, improving profitability through technology, and maintaining a strong financial position through strategic capital allocation.

Financial Data and Key Metrics Changes - The company reported Q1 revenues of $427 million, representing a 3% year-over-year growth, with ex-TAC gross profit of $152 million, which is 9% higher than last year [9][21] - Adjusted EBITDA for Q1 was $36 million, reflecting a 53% year-over-year growth, with margins significantly expanding [9][27] - Free cash flow for the quarter was $36 million, growing 35% year-over-year [9][27] - The net loss for the quarter was $8.75 million, while non-GAAP net income was $25 million [26] Business Line Data and Key Metrics Changes - The number of scaled advertisers grew by 9% year-over-year, reaching 1,996, while the average revenue per scaled advertiser declined by 3% [22][38] - Revenue growth was broad-based, including positive growth in the core native business, Taboola News, and Bidded Supply [23][24] Market Data and Key Metrics Changes - The company has seen a 1% decrease in advertising spend related to tariffs, primarily affecting its China business, which now accounts for around 5% of total Q2 revenue [10][52] - The macroeconomic environment is being closely monitored, but no material impact has been observed on the business so far [19][66] Company Strategy and Development Direction - The company is focused on capturing a $55 billion market opportunity in performance advertising outside of search and social channels [7] - The launch of the Realize platform is a significant step forward, offering new ad formats and a CPC pricing model, which is expected to unlock previously inaccessible advertising budgets [14][16] - The company aims to drive incremental ad spend through Realize's new capabilities and is focusing on verticalizing its sales organization [12][13] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the future, emphasizing the importance of performance-driven advertising as advertisers seek measurable outcomes [6][46] - The company has reiterated its full-year guidance for 2025, expecting revenues between $1.84 billion and $1.89 billion [31][33] - Management is confident in the strength of the business and continues to prioritize cost discipline while investing in key growth initiatives [19][30] Other Important Information - The company has a strong balance sheet with a net cash balance of $89.7 million and cash equivalents totaling $216.2 million [29] - A new $270 million revolving credit facility was established, allowing for more proactive management of working capital [29][30] Q&A Session Summary Question: Progress on verticalizing the sales force and scaled advertiser growth - Management indicated that the restructuring of the sales teams is complete, and early returns are positive, with a 9% growth in scaled advertisers [36][38] Question: Yield improvements and sustainability - Management noted that there were no one-time benefits in Q1, and they expect to continue growing yield going forward [40][41] Question: Impact of Google’s AI initiatives on publisher traffic - Management acknowledged some effects on search traffic but emphasized that supply is not a concern, focusing instead on demand growth [96][98] Question: Financial impact of the LINE partnership - The LINE partnership is seen as a potential gateway to a new universe of publishers, although no material financial impact is expected this year [86][87] Question: Future hiring trends and cost management - Management expects limited additional investment in sales and marketing, with a focus on ramping R&D for the Realize platform while maintaining cost discipline [88][90]

Financial Data and Key Metrics Changes - The company reported revenues of $427 million for Q1 2025, representing a 3% year-over-year growth [9][22] - Ex-TAC gross profit reached $152 million, a 9% increase year-over-year [9][22] - Adjusted EBITDA was $36 million, reflecting a 53% year-over-year growth, with an adjusted EBITDA margin of 24% [9][27] - Free cash flow for the quarter was $36 million, growing 35% year-over-year [9][28] - The net loss was $8.75 million, with non-GAAP net income at $25 million [26] Business Line Data and Key Metrics Changes - The number of scaled advertisers grew by 9% to 1,996, while the average revenue per scaled advertiser declined by 3% [23][38] - Revenue growth was broad-based, with positive contributions from the core native business, Taboola News, and Bidded Supply [24][25] Market Data and Key Metrics Changes - The company noted a 1% decrease in advertising spend related to tariffs, primarily affecting the China business, which now accounts for about 5% of total Q2 revenue [10][55] - The macro environment is being closely monitored, but no material impact has been observed on the business [9][20] Company Strategy and Development Direction - The company is focused on performance advertising, targeting a $55 billion market opportunity outside of search and social channels [6][11] - The launch of the Realize platform aims to drive incremental ad spend and improve advertiser engagement through new capabilities [12][14] - The company is pursuing partnerships with unique data supply partners and expanding its inventory through collaborations with Microsoft and Gannett [19][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the business and reiterated full-year guidance despite macro uncertainties [20][32] - The company is optimistic about the potential of the Realize platform to capture new advertising budgets and drive growth [17][63] Other Important Information - The company has a strong balance sheet with a net cash balance of $89.7 million and cash equivalents of $216.2 million [29] - A new $270 million revolving credit facility was established to enhance liquidity and reduce interest expenses [30] Q&A Session Summary Question: Progress on verticalizing the sales force and its capacity - Management indicated that the restructuring of the sales teams is complete, and early returns are positive, but it is still early in the process [36][38] Question: Relationship between scaled advertisers and average revenue - Management clarified that while the number of scaled advertisers increased, the average revenue per scaled advertiser declined, but historical averages remain strong [38][39] Question: Impact of Google’s AI initiatives on publisher traffic - Management noted some effects on search traffic but emphasized that supply is not a concern, focusing instead on demand growth [99][102] Question: Future revenue impact from the Realize platform - Management expects Realize to start impacting revenue meaningfully in late 2025 and into 2026, but it is still early to forecast specific financial impacts [61][62] Question: Resilience of different business components in uncertain macro environments - Management believes that performance advertising is well-positioned to withstand macroeconomic changes, as it focuses on direct outcomes rather than branding [68][70]

Financial Data and Key Metrics Changes - The company reported Q1 revenues of $427 million, representing a 3% year-over-year growth, with ex TAC gross profit of $152 million, which is 9% higher than last year [8][21] - Adjusted EBITDA for Q1 was $36 million, reflecting a 53% year-over-year growth, with margins expanding significantly [8][25] - Free cash flow for the quarter was $36 million, growing 35% year-over-year [8][25] Business Line Data and Key Metrics Changes - The number of scaled advertisers grew by 9% year-over-year, reaching 1,996, while the average revenue per scaled advertiser declined by 3% [12][22] - The core native business saw positive growth, and the company completed its format testing with Yahoo, which had a marginal revenue reduction impact [23][24] Market Data and Key Metrics Changes - The company noted a 1% decrease in advertising spend related to tariffs, primarily affecting its China business, which now accounts for around 5% of total Q2 revenue [9][53] - The company is seeing positive trends in Taboola News and other parts of the business, supporting its decision to maintain full-year guidance [9][10] Company Strategy and Development Direction - The company is focused on capturing a $55 billion market opportunity in performance advertising outside of search and social channels [6][10] - The launch of the Realize platform is a significant step forward, offering new ad formats and a CPC pricing model, which is expected to unlock previously inaccessible advertising budgets [13][14][15] - The company aims to drive incremental ad spend through Realize's new capabilities and is focusing on verticalizing its sales organization [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the business despite macroeconomic uncertainties, emphasizing cost discipline and investment in growth initiatives [19][20] - The company reiterated its full-year guidance for 2025, expecting revenues between $1.84 billion and $1.89 billion [30][31] Other Important Information - The company has a strong balance sheet with a net cash balance of $89.7 million and cash equivalents totaling $216.2 million [28][29] - The company repurchased approximately 16.2 million shares at an average price of $3.3 during Q1, with an additional 15.1 million shares repurchased since then [30][31] Q&A Session Summary Question: Progress on verticalizing the sales force and the impact on scaled advertisers - Management indicated that the restructuring of the sales teams is complete and early returns are positive, with the number of scaled advertisers growing by 9% [34][36][38] Question: Impact of Google news on the ad tech industry - Management noted that the shift towards privacy and the potential reduction of cookies could benefit companies with first-party data, positioning them well in the market [45][46][48] Question: Performance of different business components in uncertain macro environments - Management stated that the performance advertising space is well-positioned, and they have not seen material impacts from macroeconomic changes so far [64][66][68] Question: Guidance for the second half of the year - Management explained that the expected decline in ex TAC revenue in the second half is due to conservative guidance and the impact of prior testing with Yahoo [69][72] Question: Future hiring trends and cost management - Management indicated that while there will be some ramp in R&D hiring, overall cost increases will be limited, focusing on productivity improvements through AI [88][90]

Company Performance - Taboola.com Ltd. reported quarterly earnings of $0.07 per share, exceeding the Zacks Consensus Estimate of $0.01 per share, compared to a loss of $0.08 per share a year ago, representing an earnings surprise of 600% [1] - The company posted revenues of $427.49 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.30%, and showing an increase from year-ago revenues of $414.01 million [2] - Over the last four quarters, Taboola.com has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Outlook - Taboola.com shares have declined approximately 15.3% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The current consensus EPS estimate for the coming quarter is $0.07 on revenues of $448.62 million, and for the current fiscal year, it is $0.36 on revenues of $1.86 billion [7] - The estimate revisions trend for Taboola.com is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Computers - IT Services industry, to which Taboola.com belongs, is currently in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Investor Presentation First Quarter 2025 May 2025 Forward-Looking Statements - Disclaimer Certain statements in this presentation are forward-looking statements, including our Q2 2025 and full-year 2025 guidance and our expectations for Realize, our new performance advertising platform. Forward-looking statements generally relate to future events including future financial or operating performance of Taboola.com Ltd. (the "Company"). In some cases, you can identify forward-looking statements by terminology ...

Financial Performance - Revenues for Q1 2025 were $427.5 million, a 3.6% increase from $414.0 million in Q1 2024[106] - Gross profit for Q1 2025 was $119.3 million, compared to $109.0 million in Q1 2024, reflecting a growth of 9.9%[106] - The net loss for Q1 2025 was $8.8 million, significantly improved from a net loss of $26.2 million in Q1 2024[106] - Adjusted EBITDA for Q1 2025 was $35.9 million, compared to $23.5 million in Q1 2024, marking a 52.7% increase[106] - Non-GAAP Net Income for Q1 2025 was $25,000,000, significantly higher than $3,832,000 in Q1 2024[124] - Operating loss for the three months ended March 31, 2025, was $6.3 million, a significant improvement from a loss of $18.2 million in the same period of 2024[142] Client and Revenue Metrics - The number of Scaled Advertiser clients increased to approximately 2,000 in Q1 2025, up from 1,800 in Q1 2024[101] - Average Revenue per Scaled Advertiser was approximately $184,000 in Q1 2025, slightly down from $190,000 in Q1 2024[101] - Revenue contribution from Scaled Advertisers represented 86% of total revenues in Q1 2025, compared to 84% in Q1 2024[101] - Revenues for the three months ended March 31, 2025, increased by $13.5 million, or 3.3%, to $427.5 million compared to $414.0 million for the same period in 2024, driven by an increase in the number of Scaled Advertisers[142][143] Cash Flow and Investments - Cash flow from operating activities was $48.1 million in Q1 2025, an increase from $32.4 million in Q1 2024[106] - Free Cash Flow for Q1 2025 was $36.1 million, up from $26.8 million in Q1 2024[106] - Net cash provided by operating activities was $48.1 million for the three months ended March 31, 2025, an increase of $15.7 million compared to $32.4 million for the same period in 2024[163] - Net cash used in investing activities for Q1 2025 was $8.3 million, an increase of $6.7 million from $1.6 million in Q1 2024, primarily due to a $12.0 million purchase of property and equipment[169][170] - Net cash used in financing activities for Q1 2025 was $51.2 million, an increase of $22.4 million from $28.8 million in Q1 2024, mainly due to $122.7 million repayment of a long-term loan and $49.3 million repurchase of ordinary shares[171][172] Expenses and Costs - Total cost of revenues increased by $3.1 million, or 1.0%, with traffic acquisition costs rising by $4.7 million, or 1.7%[145] - Research and development expenses are expected to increase in future periods to support growth and technology improvements[135] - General and administrative expenses are anticipated to remain relatively flat in 2025[137] - Traffic acquisition costs for Q1 2025 were $279,797,000, slightly up from $275,120,000 in Q1 2024[113] Tax and Financial Obligations - Tax expenses decreased by $6.3 million, resulting in a tax benefit of $2.0 million for the three months ended March 31, 2025[153] - Total contractual obligations as of March 31, 2025, amounted to $140.5 million, with $51.3 million due in 2025 and $35.0 million in 2026[174] - As of March 31, 2025, the company had $126.5 million of outstanding borrowings under the 2025 Revolving Credit Facility with a variable interest rate[185] Market and Risk Factors - A 10% increase in the NIS against the USD would impact operating income by $1.6 million, while a 10% decrease would have the opposite effect[182] - The company has established a hedging program using foreign currency forward contracts to manage exposure to foreign currency risks[182] - Inflation has resulted in higher equipment and labor costs, which could adversely affect the company's financial condition if not effectively mitigated[188] - The company does not hold short-term investments as of March 31, 2025, and seeks to mitigate credit risk by limiting counterparties to major financial institutions[192] Shareholder Actions - The company repurchased 16.2 million shares at an average price of $3.03 per share during the three months ended March 31, 2025, with remaining authorization for buybacks totaling $196.4 million[161] - The company plans to continue significant investments in research and development and technology platform, and may consider future acquisitions[155] Cash and Equivalents - The company had $216.2 million in cash and cash equivalents as of March 31, 2025, down from $226.6 million at the end of 2024[156] - The company generated cash from operations of $48.1 million for the three months ended March 31, 2025, primarily due to a net loss of $8.8 million adjusted by non-cash charges of $44.5 million[163] Customer Concentration - No single customer accounted for 10% or more of accounts receivable or total revenue as of March 31, 2025[190]

Core Insights - Taboola reported strong first-quarter results for 2025, exceeding guidance across all key metrics, indicating robust momentum in performance advertising [2][3] - The company aims to continue investing in growth areas, return capital through share repurchases, and solidify its position as a leader in performance advertising beyond search and social [2] Financial Performance - Revenues for Q1 2025 were $427 million, a 3% increase from Q1 2024, driven by a 9% growth in scaled advertisers, despite a 3% decline in average revenue per scaled advertiser [6][13] - Gross profit reached $119 million, up 10% year-over-year, with ex-TAC gross profit at $152 million, reflecting a 9% increase [6][13] - Adjusted EBITDA was $36 million, a significant increase of 53%, with adjusted EBITDA margins expanding to 23.7% from 16.9% [6][13] Guidance for Future Performance - For Q2 2025, Taboola expects revenues between $438 million and $458 million, and for the full year 2025, revenues are projected to be between $1.838 billion and $1.888 billion [3][14] - The company anticipates adjusted EBITDA for Q2 2025 to be between $38 million and $44 million, and for the full year, between $201 million and $209 million [3][15] Cash Flow and Financial Health - Cash flow from operating activities was $48 million, compared to $32 million in the previous year, with free cash flow at $36 million, up from $27 million [6][13] - The company reported a net loss of $8.8 million for Q1 2025, an improvement from a net loss of $26.2 million in Q1 2024 [6][13] Shareholder Returns - Taboola is committed to returning capital to shareholders through share repurchases, reflecting confidence in its long-term growth strategy [2][3]

Financial Performance - Revenues for Q1 2025 were $427.5 million, a 3% increase compared to $414.0 million in Q1 2024, driven by a 9% growth in Scaled Advertisers[5] - Gross profit for Q1 2025 was $119.3 million, up 10% from $109.0 million in Q1 2024, with ex-TAC Gross Profit at $151.7 million, a 9% increase[15] - Adjusted EBITDA for Q1 2025 reached $35.9 million, a 53% increase from $23.5 million in Q1 2024, with adjusted EBITDA margins expanding to 23.7% from 16.9%[15] - The operating loss improved to $6 million in Q1 2025 from an operating loss of $18 million in Q1 2024, with the ratio of net loss to gross profit improving to (7.3%) from (24%)[5] - The company reported a Non-GAAP Net Income of $25.0 million for Q1 2025, compared to $3.8 million in Q1 2024[15] - The net loss for the three months ended March 31, 2025, was $8,750,000, a significant improvement from a net loss of $26,158,000 in 2024[21] - Operating loss narrowed to $6,262,000 in Q1 2025 from $18,233,000 in Q1 2024[21] - Net loss for Q1 2025 was $8,750,000, a significant improvement from a net loss of $26,158,000 in Q1 2024, representing a reduction of approximately 66.5%[32] - Adjusted EBITDA for Q1 2025 increased to $35,935,000, up from $23,489,000 in Q1 2024, reflecting a growth of about 53.0%[32] - Non-GAAP Net Income for Q1 2025 was $25,000,000, compared to $3,832,000 in Q1 2024, indicating a substantial increase of approximately 553.5%[37] Cash Flow and Liquidity - Cash flow generated by operating activities was $48.1 million in Q1 2025, compared to $32.4 million in Q1 2024, while Free Cash Flow increased to $36.1 million from $26.8 million[15] - Cash and cash equivalents at the end of the period were $216,223,000, compared to $178,534,000 at the end of Q1 2024[25] - Net cash provided by operating activities for Q1 2025 was $48,111,000, compared to $32,395,000 in Q1 2024, marking a growth of about 48.7%[36] - Free Cash Flow for Q1 2025 was $36,070,000, an increase from $26,806,000 in Q1 2024, representing a rise of approximately 34.5%[36] - The cash, cash equivalents, and short-term deposits totaled $216.2 million as of March 31, 2025, compared to $181.0 million as of March 31, 2024[15] Revenue Guidance - For Q2 2025, the company expects revenues between $438 million and $458 million, and for FY 2025, revenues are projected to be between $1.838 billion and $1.888 billion[4] - Revenue guidance for Q2 2025 is projected to be between $438 million and $458 million, while full-year 2025 revenue is expected to be between $1,838 million and $1,888 million[40] Shareholder Equity and Liabilities - Total current liabilities decreased to $437,269,000 as of March 31, 2025, down from $485,582,000 at the end of 2024[19] - Total shareholders' equity as of March 31, 2025, was $1,008,209,000, a decrease from $1,051,906,000 at the end of 2024[19] Expenses and Costs - Share-based compensation expenses totaled $15,517,000 for the three months ended March 31, 2025, down from $16,082,000 in 2024[23] - The company incurred finance expenses of $4,500,000 in Q1 2025, compared to $3,638,000 in Q1 2024[21] - The company incurred $1,972,000 in professional and legal expenses related to litigation in Q1 2025, which is not part of ongoing business operations[34] - Amortization of acquired intangibles for Q1 2025 was $17,783,000, compared to $15,935,000 in Q1 2024, reflecting an increase of approximately 11.6%[37] - The company reported foreign currency exchange rate losses of $1,524,000 in Q1 2025, compared to gains of $1,041,000 in Q1 2024[37] User Engagement - The company has approximately 600 million daily active users across its advertising platform, Realize, which is utilized by major publishers like NBC News and Yahoo[13] Strategic Focus - The company plans to continue investing in growth areas and return capital through share repurchases, focusing on becoming a leader in performance advertising beyond search and social[3]