Taboola.com, Ltd. Q3 FY2024 earnings call

• Q3 was a strong quarter, beating guidance midpoint for revenues, ex-TAC gross profit, and adjusted EBITDA. - Key growth drivers include publisher adoption of AI, new distribution channels for Taboola News, growth in revenue per user, and Tier-1 advertisers. - Taboola Select initiative to attract Tier-1 advertisers on premium publishers. - Progress with Microsoft, Yahoo, and Apple partnerships. - Growth in e-commerce, particularly Shops Your Likes creator offering. - Investments in AI technologies like Abby, Maximize Conversion, and Ad Maker.

Revenues reached $433 million, a 20% year-over-year increase. Ex-TAC gross profit was $166.4 million, growing by 30% year-over-year. Adjusted EBITDA for the quarter was $47.9 million, up 110% year-over-year with a 29% margin. Free cash flow was $42.9 million. Revenues for the year are projected to be between $1.735 billion and $1.765 billion, ex-TAC gross profit between $656 million and $679 million, adjusted EBITDA over $200 million, and free cash flow over $105 million. Q4 guidance: revenues $460 million to $490 million, gross profit $180 million to $196 million, ex-TAC gross profit $205 million to $221 million, adjusted EBITDA $83 million to $99 million, non-GAAP net income $37 million to $53 million.

• Reiterated 2024 guidance for all metrics. - Raised free cash flow target to over $105 million. - Q4 guidance: revenues $460M-$490M, gross profit $180M-$196M, ex-TAC gross profit $205M-$221M, adjusted EBITDA $83M-$99M, non-GAAP net income $37M-$53M. - Full-year revenues projected $1.735B-$1.765B, ex-TAC gross profit $656M-$679M, adjusted EBITDA over $200M, free cash flow over $105M, non-GAAP net income $84M-$104M.

Q: Can you talk about progress with your Apple relationship and when it might be a meaningful revenue distributor?

A: We're happy with the Apple partnership, sees potential to attract premium advertisers and is part of Taboola Select.

Q: With adoption of Max Conversions, what's feedback from advertisers?

A: Adoption rate of Max Conversion is about 70%, 1,500 advertisers joined this quarter, 36% growth in campaigns.

Q: Traffic goal for Taboola News?

A: Aim for Taboola News to be integrated beyond OEMs with many utilities.

Q: Impact of potential tariffs on China business?

A: Chinese business is low single-digit percentages, not a big impact.

Q: Progress on filling Yahoo inventory?

A: Seeing good results, partnership contributing to growth.

Q: Outcome of automated tools like Abby on smaller advertisers?

A: Abby helps simplify onboarding for mid-size advertisers, with potential for smaller ones.

Q: E-commerce growth and 4Q contribution?

A: E-commerce performs well, investing in sales teams.

Q: How approaching educating publishers on AI tools?

A: Industry changing, Taboola well-positioned with trusted publishers.

Q: Key drivers for positive yield growth?

A: Completion of Yahoo supply onboarding and transitioning advertisers.

Q: Tier-1 ad sales capacity for Apple supply?

A: Investing in sales teams for direct-to-consumer and emerging enterprise advertisers.