Taboola.com(US:TBLA)2021-11-10 20:30Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $339 million, representing a 17% year-over-year increase [7] - Ex-TAC gross profit was $127 million, up 22% year-over-year, exceeding guidance [8] - Adjusted EBITDA was $40 million, above the expected range [8] - Full-year 2021 ex-TAC gross profit guidance raised to $512 million to $515 million, indicating 34% to 35% growth [10][69] - Adjusted EBITDA for the full year is now projected at $174 million to $177 million, reflecting a growth of 64% to 66% [12][70] Business Line Data and Key Metrics Changes - 46% of Q3 growth came from new publisher relationships, while 54% came from existing clients [27][32] - The addition of Connexity contributed to the overall performance, with one month of its results included in Q3 [51] - The company is focusing on expanding video recommendations, which currently account for 15% of business [21][22] Market Data and Key Metrics Changes - Taboola operates in a $64 billion open web market, emphasizing the importance of diversifying outside major platforms [19] - The company reached 500 million active users daily, leveraging partnerships with 9,000 publishers [46] - The net dollar retention rate on an ex-TAC gross profit basis was 112%, indicating strong growth in existing relationships [60] Company Strategy and Development Direction - The company aims to recommend anything and anywhere, expanding its recommendation engine to various platforms [20][25] - The acquisition of Connexity is seen as a transformative move to tap into the $40 billion e-commerce market [24] - Investment in R&D is set at $100 million annually to enhance product offerings and support publisher needs [18] Management's Comments on Operating Environment and Future Outlook - Management did not observe any negative impacts from privacy changes or supply chain issues in Q3 [12][47] - The company is optimistic about Q4 and has raised its guidance based on strong Q3 performance [69] - There is a focus on leveraging contextual signals for advertising, which is becoming increasingly important in the current market [45][46] Other Important Information - The company ended Q3 with $312 million in cash and cash equivalents, indicating a strong financial position post-acquisition [68] - Free cash flow for Q3 was $19 million, with expectations to exceed the original guidance for the year [66] Q&A Session Summary Question: Impact of SmartBid Dimensions on advertiser base expansion - Management indicated that SmartBid Dimensions will simplify advertising for smaller advertisers and enhance existing advertiser experiences, potentially expanding the advertiser base significantly [76][77] Question: Deployment of products on LINE Today and Xiaomi - The integration with LINE and Xiaomi will enhance user engagement by providing personalized news recommendations, which is expected to drive traffic to publisher sites [81][82] Question: Future of ad performance with SmartBid - Management explained that SmartBid will utilize additional dimensions for optimization, improving ad performance and conversion rates over time [85][86] Question: Incorporating e-commerce demand onto the core Taboola platform - The immediate focus is on integrating Connexity demand into Taboola's core experiences, with expectations for higher yields and revenue growth [98][100] Question: Concerns about content quality with Connexity acquisition - Management reassured that the strategy will not compromise content quality, as high-quality publishers are increasingly looking to tap into e-commerce opportunities [103][106]