Taboola.com(US:TBLA)2023-11-08 20:12Financial Data and Key Metrics Changes - The company achieved $360.2 million in revenue for Q3, exceeding the midpoint of guidance by $16.2 million, and reported a gross profit of $100.7 million, also above expectations [111] - Adjusted EBITDA was $22.8 million, significantly higher than the midpoint of $4 million, and non-GAAP net income was $6.7 million, compared to a projected loss of $14 million [111] - Free cash flow for Q3 was $22.8 million, driven by stronger than forecasted ex-TAC gross profit and controlled operating expenses [112][113] - Free cash flow over the last 12 months reached $55 million, three times higher than the previous year [87] Business Line Data and Key Metrics Changes - eCommerce saw double-digit growth in Q3, driven by strong momentum in Europe and the U.S., contributing to over 100% revenue retention among top advertisers [114] - Taboola News is on track to approach $100 million in revenue for 2023, compared to $50 million in 2022 [115] - The bidding technology, particularly with Microsoft, registered nearly double the ex-TAC revenue compared to Q3 of the previous year [116] Market Data and Key Metrics Changes - The company reported that approximately 10% of its revenue comes from advertisers with billing addresses in Israel, but most of this is export revenue targeting consumers outside of Israel [108] - Less than 2% of revenue is considered domestic Israeli revenue, indicating limited exposure to local market disruptions [109] Company Strategy and Development Direction - The company aims to become the first must-buy advertising platform for the open web, similar to Google for search and Meta for social [89] - There is a focus on migrating Yahoo native advertisers to Taboola, with expectations to be fully ramped up by mid-2024 [92] - Investments in AI technology and bidding capabilities are seen as crucial for future growth, with expectations that the majority of revenue will come from AI-driven solutions in 2024 [104] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and performance despite external challenges, emphasizing the importance of professional journalism and support for open web publishers [84] - The company reiterated its guidance for 2024, expecting over $200 million in adjusted EBITDA and over $100 million in free cash flow [87][110] Other Important Information - The company has initiated a share buyback program and plans to repay additional long-term debt, reflecting a strong cash position [123][124] - The integration of Yahoo's supply into Taboola's platform is progressing well, with early results from migrated advertisers being promising [92] Q&A Session Summary Question: What is the status of the Yahoo advertiser migration? - Management confirmed good visibility and a solid plan in place for migrating Yahoo advertisers, with expectations to complete the process by mid-2024 [49][51] Question: How is the adoption of Max Conversions impacting net dollar retention? - Approximately 30% of revenue has adopted Max Conversions, which is positively affecting net dollar retention and reducing churn among advertisers [40][42] Question: What are the drivers for the next $100 million in Taboola News revenue? - Growth in Taboola News is driven by existing relationships with OEMs and expanding touchpoints, with a long-term roadmap to significantly increase revenue [44][46]