Taboola.com Ltd. Q4 FY2025 earnings call

• 2025 was a strong year with exceeding high end of guidance across key metrics. Clear early signs of acceleration from new advertising platform Realize. Repurchased 77,000,000 shares for $254,000,000 in 2025. - 2025 ex-TAC gross profit up 7% year over year, adjusted EBITDA up 7%, free cash flow up 10%. - Priorities include investing in technology to advance Realize, restructuring sales organization around ideal customer profile, and working on brand and perception. - Realize helped increase number of scaled advertisers and grow their budgets, with examples like personal finance advertisers. - Proprietary intent data and distribution are key advantages, with data from hundreds of millions of daily user actions across the open web.

In 2025, ex-TAC gross profit reached $714,000,000, up 7% year over year. Adjusted EBITDA grew 7% to $260,000,000. Revenue in the fourth quarter grew 6% to $522,300,000 and for the full year increased 8% to $1,910,000,000. Scaled advertisers grew 6% in 2025 with an average revenue per scaled advertiser up 2%. Ex-TAC gross profit in the fourth quarter was $212,800,000, margins ~41%. Full-year ex-TAC gross profit grew 7% to $713,500,000. Adjusted EBITDA for the quarter was $86,100,000 and for the full year was $215,500,000, margin 30%. Free cash flow in 2025 was $163,000,000, up 10% year over year. Fourth quarter free cash flow was $46,900,000 and full-year was $163,400,000.

For Q1 2026, revenues expected between $444,000,000 and $462,000,000, gross profit between $119,000,000 and $125,000,000, ex-TAC gross profit between $158,000,000 and $164,000,000, adjusted EBITDA range $20,000,000 to $26,000,000, non-GAAP net income from negative $1,000,000 to positive $7,000,000. For full year 2026, revenues expected between $1,990,000,000 and $2,050,000,000, gross profit between $601,000,000 and $621,000,000, ex-TAC gross profit between $753,000,000 and $774,000,000, adjusted EBITDA $222,000,000 to $236,000,000, non-GAAP net income $165,000,000 to $191,000,000. Adjusted EBITDA guidance reflects FX headwind partially offset by ex-TAC tailwinds.

• Foreign exchange was a headwind in the quarter, with Israeli shekel strength affecting operating expenses. - There could be risks related to the adoption of AI by competitors and how it might impact Taboola.com Ltd.'s proprietary data and distribution advantages. - Uncertainties in the digital ad market and macroeconomic conditions could affect advertiser budgets and spending on Realize.

Q: Barton Crockett asked about revenue variance versus guidance, mix of business, and disconnect between commentary and guidance.

A: Stephen Walker said it was revenue mix, and Adam Singolda talked about investments in Realize, sales focus on ideal customer profile, and brand investment.

Q: Matthew Dorrian Condon asked about generative AI and Realize.

A: Adam Singolda discussed open web traffic and Realize attracting different types of advertising.

Q: Laura Anne Martin asked about generative AI and Realize.

A: Adam Singolda talked about open web survival and Realize attracting display budgets.

Q: Tyler DeMatteo asked about generative AI events and Realize investment.

A: Adam Singolda and Stephen Walker discussed event factoring in guidance and Realize investment.

Q: Mark Zgutowicz asked about scaled advertiser metrics and ex-TAC margin guidance.

A: Stephen Walker talked about scaled advertiser trends and ex-TAC margin mix shift.

Q: Zachary Cummins asked about non-scaled advertisers and EBITDA.

A: Stephen Walker discussed non-scaled advertisers and EBITDA timing.

Q: James McGee Kopelman asked about digital ad market and ARPU.

A: Adam Singolda talked about digital ad market and ARPU, and Stephen Walker discussed capital allocation and ecommerce growth.