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Core Viewpoint - Taboola.com Ltd. (TBLA) shows a significantly improving earnings outlook, making it a solid investment choice as analysts continue to raise earnings estimates for the company [1][2]. Earnings Estimate Revisions - The upward trend in earnings estimate revisions indicates growing analyst optimism regarding Taboola's earnings prospects, which is expected to positively impact its stock price [2]. - The current-quarter earnings estimate of $0.09 per share reflects a remarkable change of +1000% compared to the previous year, with a 100% increase in the Zacks Consensus Estimate over the last 30 days [5][6]. - For the full year, the earnings estimate stands at $0.38 per share, representing a +3900% change from the year-ago figure, with a 20% increase in the consensus estimate over the same timeframe [6][7]. Zacks Rank and Performance - Taboola.com has achieved a Zacks Rank 1 (Strong Buy) due to strong agreement among analysts in revising earnings estimates upward, which has historically led to significant outperformance [3][8]. - Stocks with a Zacks Rank 1 (Strong Buy) and 2 (Buy) have shown a tendency to significantly outperform the S&P 500 [8]. Stock Performance - The stock has increased by 21.9% over the past four weeks, driven by strong estimate revisions, suggesting potential for further upside [9].

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]