Taboola.com (TBLA) Q4 2024 Earnings Call February 26, 2025 07:56 PM ET Company Participants Jessica Kourakos - Head of IRAdam Singolda - Founder and CEOStephen Walker - Chief Financial OfficerAndrew Boone - Managing DirectorJason Helfstein - Managing Director - Head of Internet Research Conference Call Participants Laura Martin - Managing Director, Senior Internet & Media AnalystMark Zgutowicz - Equity Research AnalystZach Cummins - Senior Research AnalystJames Kopelman - VP, TMT Research Analyst Operator G ...

TRENOWATCH 11 2.2.2.8.8.6.6 P .... NYWHERE. MOVIES | the | 22 Tab99la ��@@0 What are Blue Zones and why they are the secret to ANYTHING. ANYWHERE. AGENDA 2 Q4 Updates & Momentum 1 3 ● Platform advantage driven by Taboola's technology (Brands & Agencies, Taboola News, Newsroom) EXPANDING EX-TAC MARGINS ex-TAC Margin By Year 40.00% 40.7% 37.3% 35.00% 32.3% <-TAC Marg 31.0% 30.00% 28.2% 27.0% 25.00% 22.5% 20.00% 18.8% 15.00% 2020A 2022A 2015A 2016A 2017A 2018A 2019A 2021A → Margins increase as competitive adva ...

Taboola.com (TBLA) Q4 2024 Earnings Call February 26, 2025 08:30 AM ET Company Participants Jessica Kourakos - Head of IRAdam Singolda - Founder and CEOStephen Walker - Chief Financial OfficerAndrew Boone - Managing DirectorJason Helfstein - Managing Director - Head of Internet Research Conference Call Participants Laura Martin - Managing Director, Senior Internet & Media AnalystMark Zgutowicz - Equity Research AnalystZach Cummins - Senior Research AnalystJames Kopelman - VP, TMT Research Analyst Operator G ...

Core Viewpoint - Taboola.com Ltd. reported quarterly earnings of $0.10 per share, missing the Zacks Consensus Estimate of $0.11 per share, but showing an improvement from $0.09 per share a year ago, indicating a mixed performance in earnings expectations [1][2]. Financial Performance - The company posted revenues of $491.04 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.96% and showing a year-over-year increase from $419.77 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 Movement and Outlook - Taboola.com shares have increased by approximately 1.4% since the beginning of the year, slightly outperforming the S&P 500's gain of 1.3% [3]. - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at -$0.02 on revenues of $461.14 million, and $0.11 on revenues of $2.07 billion for the current fiscal year [7]. Industry Context - The Computers - IT Services industry, to which Taboola.com belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable environment for performance [8].

Core Insights - Taboola experienced a transformative year in 2024, focusing on performance advertising and launching a new independent platform called Realize [2] - The company has increased its share repurchase authorization by up to $200 million, indicating confidence in future growth [2] Financial Performance - For Q4 2024, Taboola reported revenues of $491 million, a 17% increase from $420 million in Q4 2023 [3] - Gross profit for Q4 2024 was $178 million, up from $138 million in Q4 2023, representing a 28% increase [3] - The net income for Q4 2024 was $33 million, compared to a net income of $0 in Q4 2023 [3] - The diluted EPS for Q4 2024 was $0.10, compared to $0.01 in Q4 2023 [3] - For the full year 2024, revenues reached $1.766 billion, a 23% increase from $1.440 billion in 2023 [3] - The full year gross profit was $534 million, up from $426 million in 2023 [3] - The company reported a net loss of $3.8 million for the full year 2024, a significant improvement from a loss of $82 million in 2023 [3] Cash Flow and Guidance - Cash flow from operating activities for Q4 2024 was $62 million, compared to $23 million in Q4 2023 [3] - Free cash flow for Q4 2024 was $52 million, up from $11 million in Q4 2023 [3] - For Q1 2025, Taboola expects revenues between $407 million and $427 million, and for the full year 2025, revenues are projected to be between $1.838 billion and $1.888 billion [4][5] Upcoming Events - Taboola will host an Investor Day on March 26, 2025, to discuss its strategy, market opportunities, and financial outlook [7]

Core Insights - Taboola has launched a new technology platform called Realize, which focuses on performance advertising beyond native advertising, search, and social media [1][2][6] - Realize aims to address the challenges advertisers face in achieving performance outcomes at scale, leveraging Taboola's unique data and AI technology [3][4][6] Company Overview - Taboola has been a pioneer in native advertising for over a decade, primarily focusing on bottom-of-article placements [2] - The company estimates that advertisers spend approximately $25 billion annually on demand-side platforms (DSPs) and niche AdTech solutions, with many channels lacking the necessary performance expertise [4][5] - Taboola identifies nearly $30 billion in social media advertising spend suffering from diminishing returns, with 75% of performance advertisers reporting similar issues [4][5] Technology Platform - Realize - Realize is described as the only independent performance platform that delivers outcomes at scale, utilizing Taboola's first-party data and AI technology [6] - The platform allows advertisers to access a broader range of inventory beyond traditional native placements, including display ads on trusted publishers and apps like NBC News and Yahoo [6][12] - Key features of Realize include an AI performance engine that optimizes ad placements and creative freedom for advertisers to use existing assets across various formats [15] Market Position and Future Outlook - The CEO of Taboola, Adam Singolda, emphasizes the need for viable alternatives to search and social media for performance advertising, positioning Realize as a significant strategic pivot for the company [7] - Taboola's partnerships with companies like Babbel and eToro highlight the expected benefits of Realize in enhancing advertising reach and ROI [8][9] - Industry experts express optimism about Realize's potential to drive true ROI and improve performance marketing outcomes [10]

Core Viewpoint - Taboola has announced an additional share repurchase authorization of up to $200 million, increasing the total authorization to approximately $240 million, reflecting confidence in its business and strong free cash flow generation [1][2]. Share Repurchase Program - The share repurchase program allows purchases to be made in the open market, through trading plans under Rule 10b5-1, in privately negotiated transactions, or otherwise, with the timing and amount subject to market conditions [2]. - The company retains the discretion to suspend, modify, or discontinue the program at any time without prior notice [2]. Upcoming Investor Day - Taboola will host an Investor Day on March 26, 2025, in New York City, where management will discuss the company's strategy, market opportunities, and financial outlook [3]. - The event will be available via live video webcast and will be accessible for replay for twelve months [3]. Company Overview - Taboola specializes in performance advertising technology, enabling businesses to achieve measurable outcomes at scale beyond traditional search and social media [4]. - The company collaborates with thousands of businesses, reaching approximately 600 million daily active users through its ad platform, Realize [5]. - Major publishers like NBC News and Yahoo, as well as OEMs such as Samsung and Xiaomi, utilize Taboola's technology to enhance audience engagement and revenue [5].

Core Insights - Taboola reported strong financial results for Q4 and full year 2024, indicating a transformative year for the company with significant growth in revenues and profitability [2][3][21] - The company launched a new independent performance advertising platform called Realize, aimed at expanding its offerings beyond traditional search and social advertising [2][3] - Taboola increased its share repurchase authorization by up to $200 million, reflecting confidence in its future performance [2] Financial Performance - Q4 2024 revenues reached $491 million, up from $419.8 million in Q4 2023, representing a 17% year-over-year increase [3][21] - Full year 2024 revenues totaled $1.766 billion, compared to $1.440 billion in 2023, marking a 23% increase [3][21] - Gross profit for Q4 2024 was $177.6 million, up from $138.3 million in Q4 2023, while full year gross profit increased to $534.2 million from $425.6 million [3][21] - Net income for Q4 2024 was $33.1 million, compared to a net loss of $0.0 million in Q4 2023, and the full year net loss narrowed to $3.8 million from $82 million in 2023 [3][21] Non-GAAP Financial Metrics - Non-GAAP ex-TAC gross profit for Q4 2024 was $212.7 million, up from $168.5 million in Q4 2023, and for the full year, it increased to $667.5 million from $535.8 million [4][37] - Adjusted EBITDA for Q4 2024 was $92.3 million, compared to $50.1 million in Q4 2023, and for the full year, it rose to $200.9 million from $98.7 million [4][34] - Non-GAAP net income for Q4 2024 was $73.3 million, up from $26.7 million in Q4 2023, while for the full year, it increased to $122.4 million from $32.6 million [4][37] Guidance for 2025 - For Q1 2025, Taboola expects revenues between $407 million and $427 million, and for the full year 2025, revenues are projected to be between $1.838 billion and $1.888 billion [5][6] - Gross profit guidance for Q1 2025 is expected to be between $109 million and $115 million, while for the full year 2025, it is projected to be between $536 million and $552 million [5][6] Upcoming Events - Taboola will host an Investor Day on March 26, 2025, to discuss its strategy, market opportunities, and financial outlook [9]

Financial Performance - The company reported a total revenue of $500 million for the year ended December 31, 2024, representing a 15% increase compared to $435 million in 2023[433]. - Total revenues for the year ended December 31, 2024, increased to $1,766,220, representing a 22.7% growth compared to $1,439,685 in 2023[459]. - Gross profit for 2024 was $534,218, up from $425,558 in 2023, indicating a gross margin improvement[459]. - Operating income for 2024 was $25,917, a significant recovery from an operating loss of $63,737 in 2023[459]. - Net loss for 2024 narrowed to $3,760 compared to a net loss of $82,040 in 2023, reflecting improved financial performance[459]. - Cash provided by operating activities increased to $184.33 million in 2024, up from $84.37 million in 2023, reflecting a growth of approximately 118%[464]. - The net loss for 2024 was $3.76 million, a significant improvement from a net loss of $82.04 million in 2023, representing a reduction of approximately 95.4%[461]. - Comprehensive loss for 2024 was $4.28 million, compared to $80.26 million in 2023, indicating a decrease of about 94.7%[461]. Liquidity and Cash Management - The company maintained cash balances exceeding $100 million as of December 31, 2024, ensuring strong liquidity for future investments[425]. - Cash and cash equivalents increased to $226,583 as of December 31, 2024, up from $176,108 in 2023[455]. - Total current assets increased to $656,001 in 2024, up from $559,412 in 2023, showing improved liquidity[455]. - The total cash and cash equivalents at the end of 2024 were $226.58 million, up from $176.11 million at the end of 2023, representing a growth of about 28.6%[464]. Investments and Acquisitions - The Company completed the acquisition of Gravity R&D Zrt. in July 2022 for a total consideration of $7,035 thousand, with $5,925 thousand attributed to goodwill[565]. - The acquisition of Gravity R&D was consolidated into the Company's financial statements but had an immaterial impact on the results for the year ended December 31, 2022[567]. Shareholder Activities - The company repurchased ordinary shares amounting to $73.6 million in 2024, compared to $55.5 million in 2023, reflecting an increase of approximately 32.6%[464]. - The Company repurchased a total of 18,287,890 shares in 2024 at an average price of $4.06 per share, with remaining authorization to repurchase up to $45,562[594]. - In February 2025, the Company's board authorized an additional $200,000 for the Buyback Program, subject to legal conditions[595]. Expenses and Costs - Share-based compensation expenses rose to $67.1 million in 2024 from $64.3 million in 2023, marking an increase of about 4.3%[464]. - The Company reported a depreciation and amortization expense of $100.93 million in 2024, compared to $96.51 million in 2023, which is an increase of approximately 4.9%[464]. - Traffic acquisition costs rose to $1,101,556 in 2024, up from $903,866 in 2023, reflecting higher investment in customer acquisition[459]. - Total interest expenses related to the long-term loan were $15,549 in 2024, down from $19,885 in 2023[584]. Risk Management - A 10% increase in the NIS against the USD would have negatively impacted operating income by approximately $2.16 million, while a 10% decrease would have positively impacted it by the same amount[418]. - The company has established a hedging program to manage foreign currency risks, specifically using foreign currency forward contracts[418]. - The company faces risks related to competition, regulatory changes, and potential disruptions from geopolitical events[22]. Revenue Recognition and Accounting Policies - The Company recognizes revenue based on the control of promised goods or services, with significant judgment required to determine gross or net reporting[521][523]. - The Company accounts for leases under ASU 2016-02, with operating lease right of use assets measured at the present value of future lease payments[8]. - The Company amortizes internal-use software development costs over an estimated useful life of three years[508]. Other Financial Metrics - The company recognized revenues from related parties amounting to $233,640 in 2024, compared to $40,902 in 2023, highlighting increased transactions with affiliates[459]. - Trade receivables rose to $370,110 in 2024, compared to $306,307 in 2023, indicating growth in customer credit[455]. - Total liabilities decreased to $666,752 in 2024 from $650,740 in 2023, indicating a reduction in financial obligations[455]. - The fair value of total warrants liability decreased from $6,129 thousand as of December 31, 2023, to $3,368 thousand as of December 31, 2024, a reduction of 45.0%[558].

Revenue and Profitability - Fourth quarter 2024 revenues reached $491.0 million, a 17% increase from $419.8 million in Q4 2023[3] - Full year 2024 revenues totaled $1,766.2 million, up 23% from $1,439.7 million in 2023[3] - Gross profit for Q4 2024 was $177.6 million, compared to $138.3 million in Q4 2023, reflecting a 28% increase[3] - Net income for Q4 2024 was $33.1 million, a significant improvement from a net loss of $0.0 million in Q4 2023[3] - Gross profit for the year ended December 31, 2024, was $534,218, up 25.5% from $425,558 in 2023[16] - Operating income for the year ended December 31, 2024, was $25,917, a recovery from an operating loss of $63,737 in 2023[16] - Net income for Q4 2024 was $33,143, compared to a net income of $3,723 in Q4 2023, marking a significant improvement[16] - Revenues for Q4 2024 reached $491,040 thousand, an increase of 17% compared to $419,774 in Q4 2023, and total revenues for the year 2024 were $1,766,220 thousand, an increase of 23% from $1,439,685 thousand in 2023[24] Cash Flow and Expenses - The company reported free cash flow of $51.9 million in Q4 2024, significantly higher than $10.5 million in Q4 2023[3] - Net cash provided by operating activities for Q4 2024 was $61,935 thousand, compared to $22,792 thousand in Q4 2023, and for the year 2024, it was $184,331 thousand, significantly higher than $84,373 thousand in 2023[21] - Free Cash Flow for the three months ended December 31, 2024, was $51,910 thousand, compared to $10,498 thousand in the same period of 2023, indicating a significant increase of 394%[32] - The company reported a Free Cash Flow of $149,176 thousand for the year ended December 31, 2024, compared to $52,240 thousand in 2023, reflecting an increase of 185%[32] Adjusted Metrics - Adjusted EBITDA for Q4 2024 was $92.3 million, up from $50.1 million in Q4 2023, representing an increase of 84%[3] - The ratio of Adjusted EBITDA to ex-TAC Gross Profit improved to 43.4% in Q4 2024, compared to 29.7% in Q4 2023[3] - Adjusted EBITDA for Q4 2024 was $92,279 thousand, up from $50,061 thousand in Q4 2023, and for the year 2024, it was $200,926 thousand, compared to $98,677 thousand in 2023[25] - Non-GAAP Net Income for Q4 2024 was $73,324 thousand, compared to $26,728 thousand in Q4 2023, with a total for the year 2024 at $122,377 thousand, significantly higher than $32,580 thousand in 2023[28] Shareholder Actions and Future Projections - The company announced a $200 million expansion of its share repurchase program, indicating strong confidence in future performance[2] - For Q1 2025, the company expects revenues between $407 million and $427 million, and for FY 2025, revenues are projected between $1,838 million and $1,888 million[4] - The projected Gross Profit for Q1 2025 is estimated to be between $109 million and $115 million, while for FY 2025, it is expected to be between $536 million and $552 million[34] - The company anticipates Traffic Acquisition Costs for Q1 2025 to be between $265 million and $282 million, with full-year costs projected at $1,198 million[34] Operating Expenses and Liabilities - Total operating expenses for the year were $508,301, compared to $489,295 in 2023, reflecting an increase of 3.9%[16] - Research and development expenses for the year increased to $142,438, up from $136,255 in 2023, indicating a growth of 4.3%[16] - Total current liabilities increased to $485,582 as of December 31, 2024, from $423,965 in 2023, reflecting a rise of 14.5%[15] - Total shareholders' equity decreased slightly to $1,051,906 in 2024 from $1,057,062 in 2023, a decline of 0.5%[15] Other Financial Metrics - The company reported a comprehensive income of $33,396 for Q4 2024, compared to $4,883 in Q4 2023[18] - Share-based compensation expenses totaled $67,098 for the year ended December 31, 2024, compared to $64,331 in 2023, an increase of 4.3%[19] - Share-based compensation expenses for Q4 2024 were $15,206 thousand, slightly up from $12,727 thousand in Q4 2023, with total expenses for the year 2024 at $60,044 thousand compared to $53,749 thousand in 2023[28] - The company incurred $3,494 thousand in M&A and other costs in Q4 2024, while there were no such costs reported in Q4 2023[25] - Professional and legal expenses related to litigation amounted to $1,664 thousand, which is not associated with ongoing business operations[30] - The company incurred $1,830 thousand in excess termination expenses due to a headcount reduction related to the launch of Realize[30] - The company has included one-time professional service costs in its financial results for the year ended December 31, 2024[30] - The company is unable to provide projections for net cash provided by operating activities due to unpredictability in certain elements, making it impractical to reconcile Free Cash Flow projections[34]