Taboola.com(TBLA) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information This section provides essential details regarding the Form 10-Q filing, including registrant identification and key dates Registrant Information This section identifies Taboola.com Ltd. as an accelerated filer, detailing its outstanding share count for the Form 10-Q - Taboola.com Ltd. is filing a Form 10-Q for the quarterly period ended June 30, 2025[2] - The registrant is classified as an 'Accelerated filer'[7] | Share Type | Number of Shares Outstanding (as of July 30, 2025) | | :----------- | :------------------------------------------------- | | Total Shares | 296,718,891 | | Ordinary shares | 264,705,115 | | Non-voting Ordinary shares | 32,013,776 | Note Regarding Forward-Looking Statements This section provides a disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties Forward-Looking Statements Disclaimer This section cautions that the Form 10-Q contains forward-looking statements, subject to risks and uncertainties, with no obligation to revise them - The report contains forward-looking statements about future results, business strategy, and operations, identified by words like 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'intend,' 'expect'[11] - These statements are subject to risks, uncertainties, and assumptions, including those detailed in the 'Risk Factors' section of the Annual Report on Form 10-K[11] - The Company operates in a competitive and rapidly changing environment, making it difficult to predict all risks or assess the full impact of factors on actual results[11] Part I: Financial Information This part presents the unaudited consolidated interim financial statements and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents Taboola.com Ltd.'s unaudited consolidated interim financial statements and explanatory notes Consolidated Interim Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity | Metric (U.S. dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------- | :------------------------ | :---------------- | | ASSETS | | | | Total current assets | $472,977 | $656,001 | | Total non-current assets | $1,055,604 | $1,062,657 | | Total assets | $1,528,581 | $1,718,658 | | LIABILITIES | | | | Total current liabilities | $439,991 | $485,582 | | Total long-term liabilities | $163,557 | $181,170 | | SHAREHOLDERS' EQUITY | | | | Total shareholders' equity | $925,033 | $1,051,906 | | Total liabilities and shareholders' equity | $1,528,581 | $1,718,658 | - Total assets decreased from $1,718,658 thousand as of December 31, 2024, to $1,528,581 thousand as of June 30, 2025[13] - Total shareholders' equity decreased from $1,051,906 thousand to $925,033 thousand over the same period[13] Consolidated Interim Statements of Income (Loss) This section details the company's financial performance, outlining revenues, expenses, and net income or loss | Metric (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $465,474 | $428,160 | $892,967 | $842,168 | | Gross profit | $135,611 | $114,778 | $254,918 | $223,731 | | Operating profit (loss) | $44 | $(7,631) | $(6,218) | $(25,864) | | Net loss | $(4,345) | $(4,291) | $(13,095) | $(30,449) | | Net loss per share (basic & diluted) | $(0.01) | $(0.01) | $(0.04) | $(0.09) | - Revenues increased by 8.7% for the three months ended June 30, 2025, and by 6.0% for the six months ended June 30, 2025, compared to the respective prior periods[17] - The company reported a net loss of $(4,345) thousand for the three months ended June 30, 2025, a slight increase from $(4,291) thousand in the prior year, but a significant reduction in net loss for the six months ended June 30, 2025, to $(13,095) thousand from $(30,449) thousand[17] Consolidated Interim Statements of Comprehensive Income (Loss) This section presents total comprehensive income or loss, including net income and other comprehensive items | Metric (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(4,345) | $(4,291) | $(13,095) | $(30,449) | | Other comprehensive income (loss) | $3,541 | $(204) | $2,350 | $(981) | | Comprehensive loss | $(804) | $(4,495) | $(10,745) | $(31,430) | - Other comprehensive income significantly improved, showing a gain of $3,541 thousand for the three months ended June 30, 2025, compared to a loss of $(204) thousand in the prior year, primarily due to unrealized gains on derivative instruments[20] - Comprehensive loss decreased substantially to $(804) thousand for the three months ended June 30, 2025, from $(4,495) thousand in the same period last year[20] Consolidated Interim Statements of Shareholders' Equity This section details changes in equity accounts, including share issuances, repurchases, and retained earnings | Metric (U.S. dollars in thousands) | Balance as of April 1, 2025 | Balance as of June 30, 2025 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Treasury Ordinary shares | $(179,624) | $(280,290) | | Additional paid-in capital | $1,351,576 | $1,369,870 | | Accumulated deficit | $(162,970) | $(167,315) | | Accumulated other comprehensive income (loss) | $(773) | $2,768 | | Total shareholders' equity | $1,008,209 | $925,033 | - Total shareholders' equity decreased from $1,008,209 thousand as of April 1, 2025, to $925,033 thousand as of June 30, 2025[21] - Repurchase of ordinary and non-voting ordinary shares resulted in a decrease of $(100,666) thousand in treasury shares for the three months ended June 30, 2025[21] Consolidated Interim Statements of Cash Flows This section reports cash generated and used across operating, investing, and financing activities | Metric (U.S. dollars in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $95,508 | $72,624 | | Net cash used in investing activities | $(21,497) | $(13,176) | | Net cash used in financing activities | $(190,028) | $(52,580) | | Exchange rate differences | $4,675 | $(778) | | Increase (decrease) in cash and cash equivalents | $(111,342) | $6,090 | | Cash and cash equivalents - at end of period | $115,241 | $182,198 | - Net cash provided by operating activities increased to $95,508 thousand for the six months ended June 30, 2025, from $72,624 thousand in the prior year[24] - Net cash used in financing activities significantly increased to $(190,028) thousand for the six months ended June 30, 2025, primarily due to share repurchases and debt repayments[24] Notes to Consolidated Interim Financial Statements This section provides detailed explanations and additional information supporting the interim financial statements NOTE 1:- GENERAL This note provides general information about Taboola.com Ltd., its business, and commercial agreements - Taboola.com Ltd. is a technology company founded in 2006, powering recommendations across the Open Web using an AI-based algorithmic engine[27] - In November 2022, Taboola entered a 30-year exclusive commercial agreement with Yahoo Inc. to power native advertising across Yahoo's digital properties, involving the issuance of Ordinary and Non-voting Ordinary shares to Yahoo[27] | Amortization Expense (U.S. dollars in thousands) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :----------------------------------------------- | :------------------------------- | :----------------------------- | | Commercial agreement asset amortization | $4,082 | $8,119 | NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods used in preparing interim financial statements - The unaudited consolidated interim financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim reporting[30] - Effective January 1, 2025, the estimated useful life of servers was adjusted from three to six years, resulting in a reduction of depreciation expense by $2,793 thousand for the three months and $5,586 thousand for the six months ended June 30, 2025[38] - The Company is evaluating the impact of recently issued accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[43][44] NOTE 3:- CASH AND CASH EQUIVALENTS This note provides a breakdown of the company's cash and cash equivalents, highlighting changes over the period | Category (U.S. dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :----------------------------------- | :------------------------ | :---------------- | | Cash | $114,866 | $154,962 | | Money market accounts and funds | — | $70,692 | | Time deposits | $375 | $929 | | Total Cash and cash equivalents | $115,241 | $226,583 | - Total cash and cash equivalents decreased by approximately 49% from $226,583 thousand at December 31, 2024, to $115,241 thousand at June 30, 2025[45] NOTE 4:- FAIR VALUE MEASUREMENTS This note details fair value measurements of financial instruments, categorized by valuation hierarchy levels | Description (U.S. dollars in thousands) | Fair Value Hierarchy | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------------- | :------------------- | :------------------------ | :---------------- | | Money market accounts and funds | Level 1 | $— | $70,692 | | Derivative instruments asset | Level 2 | $2,788 | $468 | | Public Warrants | Level 1 | $(2,530) | $(3,303) | | Private Warrants | Level 3 | $(15) | $(65) | - The fair value of derivative instruments designated as cash flow hedging instruments increased significantly from $468 thousand (asset) at December 31, 2024, to $2,788 thousand (asset) at June 30, 2025[47] - The total Warrants liability decreased from $3,368 thousand at December 31, 2024, to $2,545 thousand at June 30, 2025, primarily due to a change in fair value[51] NOTE 5:- SHORT-TERM INVESTMENTS This note provides information on short-term investment holdings and any changes during the period - As of June 30, 2025, the Company did not hold any short-term bank deposits, compared to $3,780 thousand as of December 31, 2024[52] NOTE 6:- DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES This note describes the company's use of derivative instruments to manage foreign exchange risks and hedging - The Company uses foreign currency forward contracts and options to hedge against foreign exchange risks, primarily related to the New Israeli Shekel (NIS) against the U.S. dollar, designating these as cash flow hedges[53] | Notional Amounts (U.S. dollars in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------- | :------------ | :---------------- | | Derivative instruments designated as cash flow hedging instruments | $37,841 | $49,502 | | Gains Recognized in Consolidated Statements of Loss (U.S. dollars in thousands) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :---------------------------------------------------------------------------- | :------------------------------- | :----------------------------- | | Total gains, net | $901 | $1,130 | NOTE 7:- GOODWILL AND INTANGIBLE ASSETS, NET This note provides details on goodwill and definite-lived intangible assets, including amortization expenses - There was no impairment or additions to goodwill during the three and six months ended June 30, 2025[57] | Definite-lived Intangible Assets, Net (U.S. dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :------------------------------------------------ | :------------------------ | :---------------- | | Merchant/Network affiliate relationships | $21,714 | $37,989 | | Technology | $13,390 | $19,154 | | Publisher relationships | $1,790 | $7,156 | | Total | $37,573 | $65,067 | - Amortization expenses for intangible assets were $27,494 thousand for the six months ended June 30, 2025, compared to $31,693 thousand for the same period in 2024[58] NOTE 8:- FINANCING ARRANGEMENTS This note describes the company's debt facilities, including the new revolving credit agreement and its impact - On March 18, 2025, the Company entered into a new 2025 Revolving Credit Agreement for up to $270,000 thousand, maturing on March 18, 2030[63][64] - The proceeds from the new Revolving Facility were used to repay in full the outstanding principal and accrued interest under the 2021 Credit Agreement, leading to its extinguishment and a recognized loss of $6,597 thousand[67][68] - As of June 30, 2025, the Company had $88,000 thousand outstanding under the Revolving Facility and was in compliance with its covenants[15][66] NOTE 9:- SHAREHOLDERS' EQUITY AND SHARE INCENTIVE PLANS This note details changes in shareholders' equity, including share buyback programs and compensation - The Company's board authorized an additional $200,000 thousand for its share buyback program in February 2025, and another $200,000 thousand in July 2025[72] - During the six months ended June 30, 2025, the Company repurchased 48,231,154 shares (36,713,192 Ordinary, 11,517,962 Non-voting Ordinary) at an average price of $3.09 per share[73] | Share-based Compensation Expense (U.S. dollars in thousands) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :----------------------------------------------------------- | :------------------------------- | :----------------------------- | | Total share-based compensation expense | $16,572 | $32,089 | NOTE 10:- INCOME TAXES This note explains income tax provisions, effective tax rates, and the impact of recent tax law changes | Effective Tax Rate | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | ETR | (77.5)% | 35.2% | 1.0% | (6.8)% | - The effective tax rate for the three months ended June 30, 2025, was (77.5)%, compared to 35.2% in the prior year, primarily due to geographic distribution of earnings/losses, valuation allowance changes, and tax benefits from acquired intangible assets[81] - The Company is assessing the impact of the 'One Big Beautiful Bill Act' (OBBBA), signed into law on July 4, 2025, which includes changes to U.S. federal tax law[82] NOTE 11:- COMMITMENTS AND CONTINGENCIES This note discloses contractual commitments, purchase obligations, and potential legal contingencies - The Company enters into commercial agreements with digital properties, sometimes including guaranteed payments, which could lead to gross losses if guarantees exceed actual revenue[83] - As of June 30, 2025, the Company had outstanding non-cancelable purchase obligations of $36,837 thousand, primarily for software and IT-related services[84] - The Company is not currently aware of any legal proceedings that would individually or in aggregate have a material adverse effect on its business, financial position, results of operations, or cash flows[85] NOTE 12:- RELATED PARTY TRANSACTIONS This note details transactions and agreements with related parties, particularly Yahoo Inc., and their impact - Yahoo became a principal shareholder in January 2023, following a commercial agreement and issuance of shares[86] | Related Party Transactions with Yahoo (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues from Yahoo | $46,455 (10.0% of total) | $60,302 (14.1% of total) | $94,780 (10.6% of total) | $112,426 (13.3% of total) | | Traffic acquisition costs related to Yahoo | $84,154 | $78,433 | $159,556 | $152,044 | - The Company and Yahoo entered a Share Repurchase Agreement in February 2025, amended in March 2025, allowing weekly repurchases of Yahoo's Non-voting Ordinary shares up to 1/3rd of the Rule 10b-18 limit[92] NOTE 13:- SEGMENTS AND GEOGRAPHIC INFORMATION This note provides information on the company's single operating segment, revenue, and long-lived assets by geography - The Company operates in one operating and reportable segment, with the CEO acting as the Chief Operating Decision Maker (CODM) who evaluates performance at the consolidated level[93] | Revenue by Geographic Area (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $220,462 | $204,871 | $421,953 | $398,232 | | Israel | $25,556 | $26,857 | $48,838 | $58,322 | | Germany | $39,425 | $36,732 | $77,506 | $72,429 | | United Kingdom | $19,586 | $16,290 | $39,674 | $36,364 | | Rest of the World | $160,445 | $143,410 | $304,996 | $276,821 | | Total | $465,474 | $428,160 | $892,967 | $842,168 | | Long-lived Assets by Geographic Area (U.S. dollars in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------------------------------------- | :------------------------ | :---------------- | | United States | $50,250 | $39,390 | | Israel | $85,758 | $67,867 | | United Kingdom | $4,112 | $5,024 | | Rest of the world | $17,517 | $16,103 | | Total | $157,637 | $128,385 | NOTE 14:- NET LOSS PER SHARE ATTRIBUTABLE TO ORDINARY AND NON-VOTING ORDINARY SHAREHOLDERS This note presents the calculation of basic and diluted net loss per share, including anti-dilutive potential shares | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per share attributable to Ordinary and Non-voting Ordinary shareholders, basic and diluted | $(0.01) | $(0.01) | $(0.04) | $(0.09) | - The net loss per share remained at $(0.01) for the three months ended June 30, 2025 and 2024, but improved for the six-month period from $(0.09) to $(0.04)[97] | Potential Ordinary Shares Excluded from Diluted EPS (Anti-dilutive) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :------------------------------------------------------------------ | :------------------------------- | :----------------------------- | | Warrants | 12,349,990 | 12,349,990 | | RSUs | 34,827,512 | 32,046,117 | | Outstanding share options | 9,639,763 | 9,908,835 | | Total | 56,817,265 | 54,304,942 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Taboola's financial condition, results of operations, business model, key performance drivers, and liquidity Overview This section describes Taboola's business, market position, and how it generates revenue - Taboola is a technology company that places ads on publisher sites, mobile apps, and devices, operating outside major search and social media platforms[99] - The company serves approximately 11,000 digital property partners (e.g., NBCNews, Disney, Yahoo, Apple) for monetization and audience growth, reaching about 600 million people daily[99] - Revenue is primarily generated when consumers click on, purchase from, or view ads delivered via its performance AI engine, with a portion shared with digital properties[102] Key Factors and Trends Affecting our Performance This section discusses primary internal and external factors influencing Taboola's operational and financial performance - Taboola focuses on maintaining and growing its digital property partners through exclusive multi-year contracts and improving yield via algorithms, advertiser base expansion, and new product/ad formats[104][105] - The company aims to grow its advertiser client base, particularly 'Scaled Advertisers' (over $100,000 cumulative gross spend), by improving network performance and securing increased budgets[107] - Research and development investments, especially in AI (Deep Learning), are crucial for product innovation and maintaining core business infrastructure[108] - The global advertising industry exhibits seasonality, with strongest revenues and margins in Q4 and weakest in Q1[109] - Taboola is less susceptible to privacy regulations and industry trends (e.g., Google/Apple changes) due to its first-party cookie capability and rich contextual information from partner page integration[110] Key Financial and Operating Metrics This section presents a summary of Taboola's key financial and operating performance indicators | Metric (U.S. dollars in thousands, except per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $465,474 | $428,160 | $892,967 | $842,168 | | Gross profit | $135,611 | $114,778 | $254,918 | $223,731 | | Net loss | $(4,345) | $(4,291) | $(13,095) | $(30,449) | | EPS diluted | $(0.01) | $(0.01) | $(0.04) | $(0.09) | | Cash flow provided by operating activities | $47,397 | $38,791 | $95,508 | $72,624 | | ex-TAC Gross Profit (Non-GAAP) | $172,133 | $149,540 | $323,866 | $288,428 | | Adjusted EBITDA (Non-GAAP) | $45,178 | $37,231 | $81,113 | $60,720 | | Free Cash Flow (Non-GAAP) | $34,161 | $26,158 | $70,231 | $54,402 | - Revenues increased by 8.7% for Q2 2025 and 6.0% for H1 2025 YoY[113] - Adjusted EBITDA increased by 21.3% for Q2 2025 and 33.6% for H1 2025 YoY[113] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures used to evaluate company performance - Non-GAAP financial measures are presented to provide supplemental information useful to investors and management for evaluating performance and comparability over time[114] - These measures have limitations and should not be considered in isolation or as substitutes for GAAP measures[115] ex-TAC Gross Profit This measure reflects gross profit adjusted for other cost of revenues and non-cash amortization - ex-TAC Gross Profit is calculated as gross profit adjusted to add back other cost of revenues and non-cash amortization of the Commercial agreement asset, reflecting direct cash contribution components[116] | Metric (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $465,474 | $428,160 | $892,967 | $842,168 | | Gross profit | $135,611 | $114,778 | $254,918 | $223,731 | | Add back: Other cost of revenues | $36,522 | $34,762 | $68,948 | $64,697 | | ex-TAC Gross Profit | $172,133 | $149,540 | $323,866 | $288,428 | Adjusted EBITDA and Ratio of Adjusted EBITDA to ex-TAC Gross Profit This section defines Adjusted EBITDA and its ratio to ex-TAC Gross Profit, measuring operational profitability - Adjusted EBITDA is net income (loss) adjusted for finance income/expenses, income tax, depreciation/amortization, non-cash amortization of Commercial agreement asset, share-based compensation, and other noteworthy items[121] | Metric (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(4,345) | $(4,291) | $(13,095) | $(30,449) | | Adjusted EBITDA | $45,178 | $37,231 | $81,113 | $60,720 | | Ratio of Adjusted EBITDA to ex-TAC Gross Profit | 26.2% | 24.9% | 25.0% | 21.1% | Non-GAAP Net Income (Loss) This measure adjusts net income for specific non-cash and non-recurring items for core profitability - Non-GAAP Net Income (Loss) adjusts net income (loss) for revaluation of Warrants liability, share-based compensation, M&A costs, amortization of acquired intangibles and Commercial agreement asset, foreign currency gains/losses, and related tax effects[128] | Metric (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(4,345) | $(4,291) | $(13,095) | $(30,449) | | Non-GAAP Net Income (Loss) | $30,209 | $23,010 | $55,208 | $26,842 | Free Cash Flow This measure represents cash generated by operations after capital expenditures, indicating financial flexibility - Free Cash Flow is calculated as net cash flow provided by operating activities minus purchases of property, plant and equipment, including capitalized internal-use software[133] | Metric (U.S. dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $47,397 | $38,791 | $95,508 | $72,624 | | Purchases of property and equipment, including capitalized internal-use software | $(13,236) | $(12,633) | $(25,277) | $(18,222) | | Free Cash Flow | $34,161 | $26,158 | $70,231 | $54,402 | Components of Our Results of Operations This section breaks down revenue and expense categories contributing to the company's financial results - Revenues are generated from Advertisers based on CPC, CPM, or CPA models[135] - Cost of revenues primarily includes traffic acquisition cost (TAC) paid to digital properties and other costs like data center, depreciation, and personnel[136][137][138] - Operating expenses consist of Research and development, Sales and marketing, and General and administrative, which are expected to increase to support growth[140][143][144] - Finance income (expenses), net, includes interest, Warrants liability adjustments, foreign exchange fluctuations, and bank fees[145] - The Company benefits from 'Privileged Enterprise' and 'Preferred Technology Enterprises' status under Israeli law, granting tax exemptions and reduced tax rates[146][147] Comparison of the Three months ended June 30, 2025 and 2024 This section analyzes financial performance for the three-month period, comparing 2025 results to 2024 - Revenues increased by $37.3 million (8.7%) to $465.5 million, driven by an 8.5% growth in Scaled Advertisers and $28.8 million from new digital property partners[149] - Gross profit increased by $20.8 million (18.2%) to $135.6 million, and ex-TAC Gross Profit increased by $22.6 million (15.1%), benefiting from higher margin digital properties[150] - Operating profit was $44 thousand, a significant improvement from an operating loss of $(7,631) thousand in the prior year[148] - Finance expenses, net, increased by $3.4 million, mainly due to a $4.8 million decrease in income from Warrants liability revaluation, partially offset by a $1.6 million decrease in interest expenses[158] - Tax expenses increased by $4.2 million, driven by higher profitability and one-time tax adjustments[159] Comparison of the Six months ended June 30, 2025 and 2024 This section analyzes financial performance for the six-month period, comparing 2025 results to 2024 - Revenues increased by $50.8 million (6.0%) to $893.0 million, primarily due to growth in Scaled Advertisers and $54.5 million from new digital property partners[161] - Gross profit increased by $31.2 million (13.9%) to $254.9 million, and ex-TAC Gross Profit increased by $35.4 million (12.3%), driven by advertising spend growth and margin improvements[162] - Operating loss significantly decreased to $(6,218) thousand from $(25,864) thousand in the prior year[160] - Finance expenses, net, increased by $4.3 million, mainly due to a $7.2 million increase from the new Revolving Credit Facility and a $3.1 million decrease in Warrants liability revaluation income, partially offset by a $3.4 million decrease in interest expenses[170] - Tax expenses decreased by $2.1 million, resulting in a $0.1 million tax benefit, attributed to a new full-year effective tax rate methodology, seasonality, and decreased intangibles[171] Liquidity and Capital Resources This section discusses the company's ability to meet its financial obligations and fund operations - Net cash provided by operating activities was $95.5 million for the six months ended June 30, 2025, an increase of $22.9 million from the prior year[172][181] | Cash and Cash Equivalents (U.S. dollars in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $115,241 | $226,583 | - The Company believes current liquidity, combined with operating cash flow, will be sufficient for at least the next 12 months, with potential for additional equity or debt financing for growth[175] - As of June 30, 2025, $88.0 million was outstanding under the $270.0 million 2025 Revolving Credit Facility, which matures on March 18, 2030[175][176] - During the six months ended June 30, 2025, the Company repurchased 48.2 million shares for $150.0 million under its Buyback Program, with $96.3 million remaining authorization[179] Contractual Obligations This section outlines the company's future payment commitments under various contractual agreements | Contractual Obligations (U.S. dollars in thousands) | 2025 (Remainder) | 2026 | 2027 | 2028 | 2029 | Thereafter | | :-------------------------------------------------- | :--------------- | :-------- | :-------- | :-------- | :-------- | :--------- | | Debt Obligations | $— | $— | $— | $— | $— | $88,000 | | Operating Leases | $15,563 | $28,915 | $20,038 | $11,290 | $7,785 | $14,861 | | Non-cancellable purchase obligations | $21,898 | $10,132 | $4,708 | $99 | $— | $— | | Total Contractual Obligations | $37,461 | $39,047 | $24,746 | $11,389 | $7,785 | $102,861 | - The Company has $88,000 thousand in debt obligations due thereafter (after 2029), related to the 2025 Revolving Credit Facility[192][198] - Non-cancelable purchase obligations, primarily for software and IT services, total $36,837 thousand, with $21,898 thousand due in the remainder of 2025[192][198] Recent Accounting Pronouncements This section discusses the impact of recently issued accounting standards on financial reporting - There were no material recent accounting pronouncements impacting the Company's accounting policies that were not already discussed in its 2024 Form 10-K[195] Critical Accounting Estimates This section highlights significant accounting estimates and judgments requiring management's complex assessments - There have been no material changes to the Company's critical accounting policies and estimates for the year ended December 31, 2024, as included in its 2024 Form 10-K[197] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Taboola's exposure to foreign currency, interest rate, inflation, and credit risks Foreign Currency Exchange Risk This section assesses exposure to foreign currency exchange rate fluctuations and hedging strategies | Currency Impact on Operating Income (Loss) (U.S. dollars in thousands) | Six months ended June 30, 2025 (+10% change) | Six months ended June 30, 2025 (-10% change) | | :------------------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | NIS/USD | $(1,969) | $1,969 | | EUR/USD | $2,810 | $(2,810) | | GBP/USD | $(2,090) | $2,090 | | JPY/USD | $527 | $(527) | - The Company uses derivative financial instruments (foreign currency forward contracts, call and put options) designated as cash flow hedges to manage foreign exchange risks, particularly for NIS against the U.S. dollar[199] Interest Rate Risk This section evaluates exposure to changes in interest rates on cash, investments, and variable-rate debt - The Company's cash, cash equivalents, and short-term investments are held for working capital, and changes in interest rates affect their yield and market value[201] - As of June 30, 2025, the Company had $88.0 million of outstanding borrowings under its 2025 Revolving Credit Facility with a variable interest rate, making it susceptible to interest rate fluctuations[202] - The Company does not use derivative financial instruments like interest rate swaps for hedging or speculative purposes[203] Inflation Risk This section discusses the potential impact of inflation on operating costs and financial performance - Inflation has led to higher equipment and labor costs, and the Company may not be able to effectively mitigate significant inflationary pressures on its costs, potentially affecting its business and financial results[204] Credit Risk This section assesses credit risk from accounts receivable, cash balances, and derivative instruments - Credit risk from accounts receivable is generally not significant due to ongoing credit evaluations and monitoring, with no single customer accounting for 10% or more of receivables or revenue (except as disclosed in Note 12)[205][206] - Cash balances are maintained primarily in U.S., UK, and Israeli banks, with U.S. and UK deposits exceeding insurance limits, requiring regular monitoring of bank financial strength[207] - Derivative instruments expose the Company to credit risk from counterparties, mitigated by limiting to major financial institutions and spreading risk[209] Item 4. Controls and Procedures This section reports on the effectiveness of Taboola's disclosure controls and internal financial reporting controls Evaluation of Disclosure Controls and Procedures This section confirms management's assessment of the effectiveness of the company's disclosure controls - As of June 30, 2025, management, with the participation of the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level[210] Changes in Internal Control over Financial Reporting This section reports on any material changes in internal control over financial reporting - There were no changes in internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[211] Part II: Other Information This part includes disclosures on legal proceedings, risk factors, equity sales, and other corporate information Item 1. Legal Proceedings This section confirms Taboola is not currently involved in legal proceedings with a material adverse effect - The Company is not presently party to any legal proceedings that are believed to have a material adverse effect on its consolidated business prospects, financial condition, liquidity, results of operation, cash flows or capital levels[212] Item 1A. Risk Factors This section refers to comprehensive risk factors in the 2024 Form 10-K, with no additional material changes - Investing in Ordinary shares involves a high degree of risk, as described in Part I, Item 1A: 'Risk Factors' of the 2024 Form 10-K[212] - There are no additional material changes to the Risk Factors in the 2024 Form 10-K of which the Company is currently aware[213] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details share buyback activities, including repurchased shares and remaining authorization | Period | Total Number of Shares Repurchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program (U.S. dollars in thousands) | | :------------------- | :--------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------------------------------- | | April 1 - April 30, 2025 | 15,111,587 | $2.83 | $153,611 | | May 1 - May 31, 2025 | 12,662,934 | $3.32 | $111,536 | | June 1 - June 30, 2025 | 4,214,474 | $3.61 | $96,307 | - The Company's board of directors authorized up to an additional $200,000 thousand for the Buyback Program in February 2025[215] Item 3. Defaults upon Senior Securities This section confirms that there were no defaults upon senior securities during the reporting period - None Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Not applicable Item 5. Other Information This section provides additional corporate information, including an officer's 10b5-1 plan and committee changes 10b5-1 Plan This section details an officer's 10b5-1 trading plan for the potential sale of company shares - On May 19, 2025, Kristy Sundjaja, Chief People Officer, adopted a 10b5-1 trading plan for the potential sale of up to 234,885 Ordinary shares, effective until July 31, 2026, or plan completion[220] Committee Composition This section reports on changes in the composition of the Nominating and Governance Committee - On August 5, 2025, Nechemia J. Peres was appointed as Chair of the Nominating and Governance Committee[221] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and amendments - Exhibit 10.1† is an Amendment to Compensation Package, dated June 4, 2025, by and between the Registrant and Adam Singolda[222] - Includes Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1 and 31.2) and Section 1350 Certifications (Exhibit 32)[222] - Contains Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Labels Linkbase, and Presentation Linkbase Documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[222] Signatures This section contains the signature of Stephen C. Walker, CFO, confirming the due filing of the Form 10-Q - The Quarterly Report on Form 10-Q was signed on behalf of the registrant by Stephen C. Walker, Chief Financial Officer, on August 6, 2025[224]