Taboola.com Ltd. Q3 FY2025 earnings call

• Adam Singolda noted another strong quarter, exceeding guidance, with Realize showing inflection. Bought back 14% of shares year-to-date. • Stephen Walker discussed Q3 results exceeding guidance, revenue up 15% y-o-y, ex-TAC gross profit up 6.3% y-o-y. Focus on scaled advertisers and average revenue per scaled advertiser. Mentioned foreign exchange and operating expense impacts. • Realize's expanded capabilities and AI driving improved results, with examples like a major travel company achieving lower CPCs and increased traffic. • Strong traffic growth from app and new publisher onboarding, with app traffic accounting for roughly 1/3 of global supply.

In Q3 2025, Taboola delivered revenue of $497 million. Ex-TAC gross profit was $177 million, up 6% year-over-year. Adjusted EBITDA was $48 million, with a margin of over 27%. Revenue contribution is driven by scaled advertisers, with 2,064 scaled advertisers in Q3, a 4% increase, and average revenue per scaled advertiser up 11%. Ex-TAC gross profit is a key metric, with $700 million expected for full year 2025.

• Q4 2025 guidance: Revenues $532M - $542M, gross profit $166M - $171M, ex-TAC gross profit $204M - $210M, adjusted EBITDA $83M - $85M, non-GAAP net income $52M - $56M. • Full year 2025 guidance raised: Revenues $1.91B - $1.93B, gross profit $550M - $564M, ex-TAC gross profit $700M - $710M, adjusted EBITDA $209M - $214M, non-GAAP net income $139M - $144M. • Q4 adjusted EBITDA guidance reflects foreign exchange headwind and ex-TAC tailwinds.

Q: About Realize platform, steps to take it to next level?

A: Go from native to performance, focus on sell side ICPs, keep iterating on tech.

Q: Partnership with Paramount and CTV presence?

A: Financially small now, but exciting, demand generation opportunity, tracking industry trend to performance-driven, bringing TV and performance advertising together.

Q: Traffic volume and quality?

A: Traffic up due to app direct traffic and new publisher onboarding. Human traffic not seen to decline, partners monitored for quality.

Q: AI impact?

A: AI drives higher yields, success rates for advertisers. Predictive audience, Abby tool, productivity tools like meeting prep are impacts.

Q: Revenue ex-TAC deceleration and non-TAC COGS?

A: Margin down due to Yahoo testing last year. Q4 margin down due to Yahoo onboarding distortion and Chinese advertiser demand drop. Non-TAC COGS change due to server accounting and capitalized project accounting.

Q: Marketing spend and adjusted EBITDA margin?

A: Increased marketing spend as advertisers more likely successful with Realize. Q4 adjusted EBITDA margin not to focus on, 30%+ margin as guardrail.

Q: Sales side brand perception and realize inflection assumptions?

A: Investing in perception, showing success with advertisers. Inflection assumptions include number of scaled advertisers, propensity to spend, dollar value of spend.