Taboola.com Ltd. Q2 FY2025 earnings call

• Adam Singolda noted strong Q2 performance, beating high end of guidance, buying back ~12% of shares in H1, and raising full-year guidance. - Realize, the new performance advertising platform, is seeing early traction with 650 advertisers testing its display and social capabilities. - Taboola News is growing double digits, offering unique supply and strong performance for advertisers. - Minimal impact from LLM-driven search changes due to top-tier publisher partners (e.g., ESPN, USA TODAY) with limited search traffic exposure and OpenWeb platform partnerships (e.g., Yahoo!, Microsoft) with little search traffic.

In the second quarter, Taboola reported revenues of $465 million, representing 9% year-over-year growth. Ex-TAC gross profit was $172.1 million, a 15.1% year-over-year increase. Adjusted EBITDA for the quarter was $45.2 million, reflecting 21.3% year-over-year growth. Free cash flow was $34.2 million, over 30% higher than the same quarter last year. Revenue contribution from scaled advertisers (those spending over $100,000 in the last 12 months) was a key driver, with both the number of scaled advertisers growing nearly 9% and average revenue per scaled advertiser increasing about 2%.

• Third quarter 2025 guidance: Revenues between $461 million and $469 million, gross profit between $127 million and $133 million, ex-TAC gross profit $166 million to $172 million, adjusted EBITDA $43 million to $48 million, and non-GAAP net income $29 million to $34 million. - Full-year 2025 guidance: Revenues between $1.86 billion and $1.89 billion, gross profit between $541 million and $555 million, ex-TAC gross profit $689 million to $703 million, adjusted EBITDA $208 million to $214 million, and non-GAAP net income $138 million to $144 million. Growth is normalized for Yahoo onboarding impact, with Realize expected to drive return to double-digit growth.

• Minimal impact from LLM-driven search changes to date, but potential future risks if search traffic to publishers decreases significantly. - Competitive landscape in performance marketing poses challenges as the space becomes increasingly competitive.

Q: How to get back to double-digit growth from current 3%-5% growth?

A: Stephen C. Walker said returning to double-digit growth relies on Realize expanding into larger TAM by winning budgets from social and display.

Q: Why does Taboola's product fit marketers' needs?

A: Adam Singolda stated Taboola makes it easy for advertisers to work with them, allows importing social and display formats, has strong distribution with big partners, and uses AI for effective campaign advising.

Q: Impact of LLM-driven search changes on OpenWeb?

A: Adam Singolda mentioned minimal impact to date, with 5% of traffic from search, and sees opportunity for LLM on publisher sites creating new touch points.

Q: Potential gating factors for Realize ramp?

A: Adam Singolda said Realize needs to compete in fragmented display advertising and address diminishing returns in social spend tail.

Q: Update on China tariff environment?

A: Stephen C. Walker said China revenue impact is <1% of total, not material, and no recovery factored into guidance.

Q: Taboola News opportunity?

A: Adam Singolda said Taboola News has strong momentum with unique supply on device OEMs, growing faster than device growth, and aligned with Realize strategy.