Taboola.com(US:TBLA)2022-05-13 16:00Financial Data and Key Metrics Changes - Q1 2022 revenue was $335 million, with ex-TAC gross profit of $135 million, representing a 31% year-over-year growth [36][38] - Adjusted EBITDA for Q1 was $35 million, with an adjusted EBITDA margin of 25.2%, which was lower year-over-year but in line with expectations [40][42] - Full-year 2022 guidance was revised to expect gross profit between $595 million and $616 million and adjusted EBITDA between $152 million and $162 million [10][43] Business Line Data and Key Metrics Changes - The growth in ex-TAC gross profit was driven by new digital property partners and growth from existing partners, with a net dollar retention rate of 106% [38][39] - E-commerce contributed 15% of ex-TAC gross profit in Q1, with steady progress post-Connexity acquisition [27][28] - The company aims to double its engineering resources in performance advertising over the next year [13][72] Market Data and Key Metrics Changes - Economic uncertainty due to the war in Ukraine negatively impacted the European advertising business, which constitutes over 30% of total revenue [8][31] - The weakening euro against the U.S. dollar had an estimated 1.5% impact on growth in Q1 [33] - The company noted that performance advertisers were less affected by the macroeconomic environment compared to brand advertisers [84] Company Strategy and Development Direction - The company is focusing on replacing traditional banner ads with personalized recommendations, targeting a $64 billion open web advertising market [15][16] - Taboola News is experiencing rapid growth, contributing significantly to the business [88] - The company plans to expand its technology and product offerings, including the SmartBid product, to enhance performance advertising capabilities [13][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the business, expecting to generate significant cash flow and maintain profitability despite macro challenges [11][44] - The revised guidance reflects a conservative outlook, with management believing that the two one-time events impacting guidance are now behind them [10][35] - The company remains committed to investing in growth opportunities, even during economic downturns [110] Other Important Information - The company has a strong balance sheet with $318 million in cash and short-term deposits, exceeding its debt balance of $285 million [42] - Management highlighted the importance of personalized homepages and partnerships with publishers to drive growth [25][26] Q&A Session All Questions and Answers Question: Can you give us a little color on the bidder product that you called out as being behind plan? - The bidder is fully live and has potential for growth, with plans to integrate it into other inventory beyond Microsoft [51][53] Question: Did the overall activity in Europe just step down on the heels of the war? - Yes, the economic uncertainty led to reduced spending from advertisers, impacting global yields [54][56] Question: Can you talk about where you saw advertiser strength during the quarter? - The impact was more regional, with Europe being weaker, while performance advertisers remained stable compared to brand advertisers [84][85] Question: What do you view as the two or three biggest factors that could drive upside? - Strong publisher pipeline, explosive growth in Taboola News, and improvements in the bidder technology are key factors for potential upside [88][90]