Taboola.com Ltd. Q4 FY2024 earnings call

• 2024 was a record year with nearly 50% more free cash flow than planned, leading to a $200 million expansion of the buyback authorization.
• 2025 guidance is for single-digit growth, with the focus on scaling demand, investing in AI, and strengthening partnerships.
• Announced the new performance advertising platform Realize, expanding beyond native advertising to capture the full performance market opportunity.
• Integrated partners like Yahoo and Apple, and onboarded enterprise advertisers such as Samsung, Citi, Verizon.
• Emphasized the unique assets of first-party data, unmatched distribution, and cutting-edge AI as key competitive advantages.

For the full year 2024, Taboola.com Ltd. achieved ex-TAC gross profit of $667 million, representing a 25% growth versus the prior year. The fourth quarter saw revenues reach $491 million, with ex-TAC gross profit at $212.7 million, growing 26% year over year. Full year adjusted EBITDA was $200.9 million, a 104% increase from the prior year. Fourth quarter adjusted EBITDA was $92.3 million, growing 84% year over year. Operating cash flow for Q4 was $61.9 million, with free cash flow reaching $51.9 million. For the full year, operating cash flow was $184.3 million, and free cash flow was $149.2 million.

• For Q1 2025, revenues are expected to be between $407 million to $427 million, gross profit from $109 million to $115 million, ex-TAC gross profit from $142 million to $148 million, adjusted EBITDA from $22 million to $26 million, and non-GAAP net income from $2 million to $6 million.
• For full year 2025, revenues are expected to be between $1.84 billion to $1.89 billion, gross profit from $536 million to $552 million, ex-TAC gross profit from $674 million to $690 million, adjusted EBITDA from $201 million to $209 million, and non-GAAP net income from $122 million to $120 million.
• Introduced new metrics: scaled advertisers (spent over $100,000 on the network in trailing year) and average revenue per scaled advertiser to track progress in growing advertiser demand.

• Difficulty in scaling native advertising demand quickly enough to utilize existing supply, as advertisers prefer standard display ads over native.
• Competition from other platforms like The Trade Desk, Amazon, etc., which have established relationships with advertisers and DSPs.
• Uncertainty in the timeline for Realize to gain traction and drive significant growth, potentially affecting the ability to meet long-term growth ambitions.

Q: Laura Martin asked about Amazon's threat to Taboola's connectivity business and if Taboola is limited by its mobile device focus.

A: Adam Singolda responded that Amazon's actions present opportunities for Taboola outside walled gardens, and Taboola aims to be the performance advertising specialist outside of search and social.

Q: Andrew Boone inquired about Realize's product changes and the step down in Q1 2025 guidance.

A: Adam Singolda explained Realize provides more supply, easier creative upload, and new targeting, while Steve Walker stated the guidance was de-risked to give Realize time to gain traction.

Q: Jason Helfstein asked about Yahoo's impact and cost base.

A: Steve Walker responded Yahoo is a great deal but not growing as expected, and Taboola is investing in Realize to unlock growth while maintaining a 30%+ EBITDA margin.

Q: Mark Mijatovic asked about Realize's development timeline and Yahoo testing implications.

A: Adam Singolda said Realize was developed over a year, and Steve Walker discussed cost structures and that Yahoo testing is unwound, with Q1 having some carryover.

Q: Zach Cummins asked about share buybacks vs debt and Realize's traction timeline.

A: Steve Walker said share buybacks are the top use of capital, and it's too early to determine Realize's traction timeline.

Q: James Kopelman asked about advertiser interest in Realize and AI investment.

A: Adam Singolda said advertisers are happy with Realize, and Taboola will use AI with first-party data and distribution to drive results.