Q4 2023 Taboola.com Ltd Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to Taboola's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Good day and thank you for standing by welcome to the Bolus first quarter excuse me fourth quarter 2023 earnings conference call. At this time, all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

To ask a question. The one session you will need to press star one on your telephone you will then hear an automated message advised in your hand, it's wait.

Operator: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Jessica Kourakos.

Draw. Your question. Please press star one again please.

Please be advised that today's conference is being recorded I would now like to turn the conference over to your speaker for today, Jessica Jessica Kavakos. Please begin.

Yeah.

Yeah.

Jessica Kourakos: Thank you, and good morning everyone, and welcome to Taboola's fourth quarter and fiscal 2023 earnings conference call. I'm here with Adam Singolda, Taboola's founder and CEO, and Steve Walker, Taboola's CFO. The company issued earnings materials today before the market, and they are available in the investor section of Taboola's website. Now, I'll quickly cover the safe harbor.

Thank you and good morning, everyone and welcome to <unk> fourth quarter and fiscal 2023 earnings conference call I'm here with Adam singled out towards founder and CEO and Steve Walker.

CFO the company issued earnings materials today before the market and they are available on the investors section of <unk> website.

Now I'll quickly cover the safe harbor certain statements today, including our expectations for future periods are forward looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings.

Jessica Kourakos: Certain statements today, including our expectations for future periods, are forward-looking. They are not facts and are subject to material risks and uncertainties described in our SEC filing. The statements are based on currently available information, and we undertake no duty to update them except as required by law. Today's discussion is also subject to the forward-looking statement limitations in the earnings press release. During this call, we will use terms defined in the earnings release and refer to non-GAAP financial... For definitions and reconciliations to GAAP, please refer to the non-GAAP tables in the earnings release posted on our website. With that, I'll turn the call over to Adam. Thanks, Jessica.

Statements are based on currently available information and we undertake no duty to update them, except as required by law.

Today's discussion is also subject to the forward looking statement limitations in the earnings press release future events could differ materially and adversely from those anticipated join.

During this call we will use terms defined in the earnings release and refer to non-GAAP financial measures for definitions and reconciliations to GAAP. Please refer to the non-GAAP tables in the earnings release posted on our website with that I'll turn the call over to Adam.

Adam Singolda: Good morning, everyone, and thank you all for joining us. Before we talk about the business, I want to start with a word about our people. I've always said that a company's true innovation is its culture and people, and I'm so proud of the tremendous resilience displayed by our nearly 2,000 taboolars during the war in Israel. That resilience is what's driving our progress in enriching new users, delivering engaging experiences on the open web, improving our effectiveness at monetization, and driving yields. We have real momentum coming into this year, and it shows in our Q4 results and strong 2024 financial guidance. Turning first to our quarterly results, we had a strong end to 2023. Q4XDAC of $168.5 million, growing 6% for 2023 Q4. Q4 Adjusted EBITDA of $50.1 million, a significant beat to the high end of our guidance by $18 million, representing over 30% adjusted EBITDA. Free cash flow in Q4 was $10.5 million, bringing our 2023 free cash flow to $52.2 million, representing 3x growth over 2022, as well as a 50% conversion to EBITDA, which is our desired stated goal.

Thanks, Jessica good morning, everyone and thank you all for joining US before we talk about the business I wanted to start with a word about our people.

We said that accompanies true innovation is its culture and people and I'm. So proud of the tremendous resilience displayed by our nearly 2000 bowlers during the war in Israel.

Resilience is what's driving our progress in reaching new users delivering engaging experiences in the open web improving our effectiveness at monetization and driving yield.

We have real momentum coming into this year and it shows in our Q4 results and strong 2024 financial guidance.

Turning first to our quarterly results, we had a strong end to 2023.

For ex Tac of $168 5 million growing 6% for 2023 Q4.

Q4, adjusted EBITDA of $51 million, a significant beat to the high end of our guidance by $18 million representing over 30% adjusted EBITDA margin.

Free cash flow in Q4 was $10 $5 million, bringing our 2023 free cash flow to $52.2 million, representing three X growth over 2022, as well as 50% conversion to EBITDA, which is our desired stated goal.

Adam Singolda: 2024 is set to be a record year for Taboola across all key measures, revenue, ag-tech gross profit, adjusted EBITDA, and free cash flow. On the revenue front, we're back to fast growth. Revenue is growing 33% to nearly $2 billion this year. XTAC is growing 25% to $670 million. We are reiterating our adjusted EBITDA guidance of over $200 million, which is 2x 2023

'twenty 'twenty four is starting to be a record year for tabbouleh across all key measures revenue ex Tac of gross profit adjusted EBITDA and free cash flow on the revenue front, we're back to fast growth revenues growing 33% to nearly $2 billion. This year.

Ex Tac is growing 25% to $617 million, we are reiterating our adjusted EBITDA guidance of over $200 million, which is two X 2023, and we are reiterating our free cash flow guidance of over $100 million also nearly two <unk> of 2020.

Adam Singolda: And we are reiterating our free cash flow guidance of over $100 million, also nearly 2x that of 2023. On the business front, there's a lot of good momentum. 2024 is benefiting from fast adoption of our AI offerings, and we assume yield expansion this year after two years of software. Yahoo is ramping up, already crossing the $100 million mark in Q1 with great trust and collaboration between our teams. Now, since we signed the partnership with Yahoo, many investors have asked us, what is next? What will be the next Yahoo Tag partnership? And I'm very, very happy to share that another iconic consumer brand has just chosen Taboola as its partner of choice to help them grow their advertising business. I hope to share more about this very soon.

Three.

On the business front, there is a lot of good momentum.

'twenty 'twenty four is benefiting from fast adoption of our AI offerings, and we assume yield expansion. This year after two years of softness yeah.

Yahoo is ramping up already crossing the $100 million Mark in Q1, with a great Trust and collaboration between our teams now essentially started a partnership with Yahoo. Many investors have asked US what is next what would be the next Yahoo talk partnership and I'm very very happy to share that another iconic consumer.

Our brand is just chosen to pull them as its partner of choice to help them grow their advertising business I hope to share more about this very soon.

Adam Singolda: On the back of our business momentum, strong balance sheet, and commitment to shareholder returns, we're announcing a new share buyback authorization of $100 million, which represents approximately 6% of our current market share. 2023 is going to be an investment year for growth. We're investing more than $100 million a year in R&D and AI to bring users and advertisers the same amazing experience they have when they interact with search and social platforms. Every day, we're getting closer to the size of X, Pinterest, Snap, and others in revenue and ad revenue, and we're paving our way to becoming the very first must-buy platform for the open market. As I reflect on our journey, 10 years ago, we generated just over $200 million in revenue. I remember it like it was yesterday.

The bulk of our business momentum strong balance sheet and commitment to shareholder returns, we're announcing a new share buyback authorization of $100 million, which represents approximately 6% of our current market cap.

23 was going to be an investment year for growth, we're investing in more than $100 million a year in R&D and AI to bring users and advertisers the same amazing experience they have when they interact with search and social platforms.

Every day, we're getting closer to the size of ex Pinterest snap and others in revenue and AD spend and we're paving our way to becoming the very first must by platform for the open web.

As I reflect on our journey 10 years ago, we generated just over $200 million in revenue I remember I think it was yesterday and this year 10 years later, we're approaching $2 billion now looking ahead I see two key themes that will.

Adam Singolda: And this year, 10 years later, we're approaching $2 billion. Now, looking ahead, I see two key themes that will allow us to achieve our financial transformation in 2024. The first one is reaching and engaging users on the open web.

Allow us to achieve our financial transformation in 2020 for the first one is reaching and engaging users in the open web with the addition of Yahoo, and now another iconic consumer brand, there's a lot of momentum here.

Adam Singolda: With the addition of Yahoo and now another iconic consumer brand, there's a lot of momentum here. The second one is how well we can monetize our time with consumers, specifically growth in performance advertising and AI to drive yield. Now, let's expand into both of these areas, starting with how we reach users on the open web.

One is how well we can monetize our time with consumers specifically growth in performance advertising and AI to drive yield now, let's expand into both of these areas.

Starting with how we reach users on the open web we're seeing great momentum of publishers children's Ebola on the back of our technology investments.

Adam Singolda: You've seen great momentum of publishers choosing Taboola on the back of our technology investors. We're so much more than just money to publishers as we empower the entire publisher organization, the editorial team, subscription team, audience team, monetization team, and more. Publisher win rates continue to improve with terrific new publisher partners joining the Taboola family from all around the globe, including A360 Media, Post Media, Times Internet, Non-Entertainment, and more. [inaudible] In the industry, we're seeing a shift of great consumer companies getting into advertising in a bigger way. This includes Disney, Amazon, Netflix, DoorDash, Uber, Walmart, and more, where, for some, advertising is already one of the most profitable lines of business they have.

So much more than just money to publishers as we empower the entire publish organization. The editorial team subscription team audience steam monetization team and more publisher win rates continue to improve with terrific new publisher partners, joining us double our family from all around the globe, including <unk>.

<unk> hundred 60 media post media times Internet, non infotainment and more we renewed and expanded our scope with existing publishers, including NBC News Mcclatchy editorial Globo preside why net and more.

In the industry, we're seeing a shift of great consumer companies getting into advertising in a bigger way. This includes Disney Amazon Netflix door dash, Uber or Walmart and more where to some advertising is already one of the most profitable lines of business they have.

Adam Singolda: I expect that Fortune 500 CEOs will increasingly be asked to present their advertising strategy and that the advertising industry will become a trillion-dollar market in years. This is just the beginning. Now, while I believe many of these companies would try to sell directly to big brands, many would consider partnering with a technology company like Taboola to reach tens of thousands or hundreds of thousands of mid-funnel performance advertisers. We have an opportunity to become the advertising engine of choice for the open web. We call it advertising in a box.

I expect that Fortune 500, Ceos will increasingly be asked to present their advertising strategy and the advertising industry will get to become a trillion dollar market in years to come. This is just the beginning now while I believe many of these companies will try to sell directly to big brands many would consider partnering.

With a technology company electric boiler to reach tens of thousands or hundreds of thousands of mid funnel performance advertisers, we have an opportunity to become the advertising engine of choice to the open web we collect advertising in a box.

Adam Singolda: Signing strategic partnerships with publishers and big consumer platforms gives Taboola another way to reach users and access new premium advertisers. And we're seeing it already with Yahoo as incredible brands are starting to expand, and these are the best of the best out there. Names like Samsung and Verizon, Hulu, Hilton Hotels, Southwest Airlines, Citibank, and many others. On the Yahoo!

Any strategic partnerships with publishers and big consumer platforms Giftable, another way to reach users in excess new premium advertisers and we're seeing it already with Yahoo is incredible brands are starting to spend and these are the best of the best outdoor names like Samsung and Verizon Hulu Hilton Hotel.

Southwest Airlines, Citibank and many others.

Adam Singolda: On that front, I can tell you we just had an executive offsite with the Yahoo! leadership, and we're focused on executing our plans this year and into 2025. Our biggest priority is demand migration of Yahoo! omnichannel advertisers.

On the upfront I can tell you. We just had an executive office types with yellow leadership, and we're focused on executing our plans this year and into 2025, our biggest priority is demand migration of Yahoo. Omnichannel advertisers I'm happy to tell you. We're seeing good results and were recently shared the case study of large.

Adam Singolda: I'm happy to tell you we're seeing good results, and we recently shared a case study of large advertisers seeing 3x in lead volume at 24% lower cost. To share some of Yahoo's good progress, we expect Q1 revenue to cross the $100 million mark, which is fast-rising. Beyond working with publishers, we also reach users as part of Taboola News, as we bring our publishers' content to Android devices.

Advertisers are seeing three X and leads volume at 24% lower cost.

To share some of Yahoo is good progress, we expect Q1 revenue to cross the $100 million in revenue, which is fast ramping.

Beyond working with publishers, we also reach users as part of Triple a news as we bring our publishers content to Android devices.

Adam Singolda: Taboola News had a spectacular year in 2023, with revenue growing to over $100 million. It is still in the early stages, with a lot of work ahead of us, yet we expect another strong year for Taboola in 2024. This is because device manufacturers all around the world continue to seek differentiated offerings that delight users with personalized experiences.

Well the news had a spectacular year in 2023 with revenue growing to over $100 million. It is still early stages with a lot of work ahead of US yet we expect another strong year for table and using 2024. This is because device manufacturers all around the world continue to seek differentiated offering.

The delight users with personalized experiences.

Adam Singolda: Beyond publishers and Taboola News, we're also reaching users with our header bidder. We're continuing to take advantage of our direct demand, unique data, and AI to bid on inventory that is not exclusively ours. Microsoft continues to be our largest bidder partner, and we expect to expand our scope across a network of publishers in 2024. Microsoft made some changes to its ETHICS platform in Q4 that impacted all ETHICS partners they work with, including us.

Beyond publishers and Triple our news, we're also reaching users with our header bidder will continue to take advantage of our direct demand unique data and AI to build an inventory that is not exclusively ours.

Croissant continues to be our largest bidder partner and we expect to expand our scope across our network of publishers in 2020 for Microsoft made some changes to its epic platform in Q4 that impacted all ethic partners. They work with including US. This had a single digit millions of dollars impact in Q4 and a small.

Adam Singolda: This had a single-digit million dollars impact in Q4 and a small impact to 2024, which is already included in our guidance. Now switching to the second driver of revenue growth, how we monetize time with consumers, essentially how we grow yields. Yields represents the revenue we can generate per user. For comparison, we estimate Meta makes $200 of revenue per user a year in the U.S. Snap makes $33, and we make about $3 to $4 per user per year.

Impact to 2024, which is already included in our guidance.

Now switching to the second driver of revenue growth, how we monetize time with consumers essentially how do we grow yield.

Yields represents the revenue we can generate per user for comparison, we estimate meta mix $200 of revenue per user a year in the U S. Snap next $33 and we make about three to $4 per user a year.

Adam Singolda: While I think Taboola is among the best on the open web when it comes to monetizing user attention, you can imagine how much runway we have to improve and how much better the open web can do. When we win, the open web wins. Now, the open web is about $80 billion market because it uses low-yield monetization capabilities invented 30 years ago, such as display banners, text ads, interstitials, and more. And on top of that, only on the open web, advertisers are asked to bid using CPC or CPM, which companies like Google or Meta don't do. Now, there are three ways Taboola will grow its yield. The first one is data. This is where code on the page being bigger and getting a large volume of clicks from the network makes us better at driving conversions to advertisers faster. The second one is AI. Deep learning is really hard to do.

I think people is among the best in the open web when it comes to monetizing user attention you can imagine how much runway we have to improve and are much better at the open web can do when we win the open web wins now.

Now the open web is about $80 billion market because it uses low yields monetization capabilities invented 30 years ago, such as display banners text ads interstitial and more and on top of that all in the open web advertisers are asked to bid using CPU.

See our CPM, which companies like Google or meta don't do.

Now there are three ways Kabbalah will grow yield. The first one is data this is where our current page being bigger and getting a large volume of clicks from the network makes us better at driving conversions to advertisers faster.

Second one is AI deep learning is really hard to do we've been added for years and this is a key element as it relates to matchmaking between users to information.

Adam Singolda: We've been at it for years, and this is a key element as it relates to matchmaking between users and information. And the third one is advertisers. We have 15,000 to 20,000 advertisers as of now, while Google and Meta have 10 million advertisers. Bringing more advertisers means better diversity and personalization to offer users the ad they may like. We're seeing great momentum for Maximize Convergence, our advanced AI bidding technology. Advertisers are seeing up to 50% boost in conversions while maintaining their cost per acquisition, or CPA, as well as some advertisers are seeing a reduced CPA by nearly 20%. Let's give an example.

And the third one is advertisers we have 15 to 20000 advertisers as of now while Google and met I have 10 million advertisers, each bringing more advertisers mean, better diversity and personalization to offer users the AD they may like.

We're seeing great momentum for maximize conversions are advanced AI bidding technology.

Others are seeing up to 50% boost in conversions, while maintaining their cost per acquisition or CPA as well as some advertisers are seeing reduced CPA by nearly 20% let's.

Adam Singolda: If you sold 10 flower bouquets with Taboola, and it cost you $30 to get a single customer, you can now sell the same 10 bouquets at the cost of $24 per customer, or sell up to 15 bouquets at the same $30 cost to acquire that customer. Now that's selling a lot more flowers and saving more, which is great. Now, as more advertisers adopt our AI and max conversions, we expect improved retention, essentially lower churns, as well as an increase in net dollar retention, NDRs, which means advertisers are able to spend more with us over time. In Q4, we launched Generative AI AdMaker, helping advertisers kick off a campaign fast. Your self-service advertisers, one in four new creatives, are being generated using our new generative AI. In 2024, we're focused on enhancing our data integration with Yahoo, continuing adoption, and improvements of Maximize conversions, as well as launching a new Maximize ROAS optimization product called Maximize Revenue. Maximizing revenue is a way for advertisers that have direct value associated with conversions, like in the e-commerce space, to optimize their desired return on investment.

Let's give an example, if you sold 10 flower bouquets with Ebola and its cost with $30 to get a single customer you can now sell the same 10 bouquets at a cost of $24 per customer or set up to 15 bouquets at the same $30 cost to acquire that customer now that selling a lot more.

Flowers and saving more which is great.

Now, it's more advertisers adapt our AI and Max conversions, we expect improved retentions essentially lower churn as well as increase in net dollar retention and Drs, which means advertisers are able to spend more with us over time.

In Q4, we launched generated AI AD maker, helping advertisers kick off the campaign faster for self service advertisers wanting for new creative are being generated using our new generated NII in.

In 2024, we're focused on enhancing our data integration with Yahoo, continuing adoption and improvement to maximize conversions as well as launching a new maximize rollout optimization product called maximize revenue.

Maximize revenue is the way for advertisers that have a direct value associated with conversions like in the e-commerce space to optimize their desire to return on investment I'm happy to say that with this momentum we're already 50% of our revenue is driven by advertisers, who adopted Max conversions and our exciting road.

Adam Singolda: I'm happy to say that with this momentum, 50% of our revenue is driven by advertisers who adopted max conversions and our exciting roadmap. We're back to yield growth this year, and other segments of advertisers are helping us drive yield growth and see momentum is equal. In 2023, we'll have benefited from the combined firepower of Connexity, Skimlinks, and Taboola. We launched Turnkey Commerce, which is where we partner with publishers to establish or expand their commerce business. This is in high demand; we essentially create the commerce content, drive traffic to it, and monetize it, all powered by Taboola. I'm very, very happy to say that at the end of 2023, we signed an agreement with the Associated Press, one of the largest and most trusted news publishers in the world, to power its new e-commerce destination using Taboola Turnkey Commerce. eCommerce represents approximately 20% of XDAC, its premium revenue, and we continue to see it as an important growth driver for Taboola in Europe. Now, as I'm wrapping up my part, I We have more code on this page than anyone.

Map, we're back to yield growth this year.

In other segments of advertisers that is helping us drive yield growth and seen momentum is E. Commerce in 2023, we've benefited from the combined firepower of connectivity skim links and tabular, we launched turnkey commerce, which is where we partner with publishers to establish or expand their ecommerce business.

This is in high demand, we essentially created commerce content drive traffic to it and monetize it all powered by tubular.

I'm very very happy to say that at the end of 2023, we signed an agreement with the associated press one of the largest and most trusted news publishers in the world to power its new e-commerce destination using tabbouleh turnkey commerce.

E Commerce represents approximately 20% of ex Tac, It's premium revenue and we continue to see it as an important growth driver for <unk> in years to come.

Wrapping up my part I would be remiss in not acknowledging that our industry is facing tectonic changes this year that cookie deprecation journey II and the need for performance advertising in times of recession and market softness and we are so ready we have more current phased in anyone we understanding.

Tent with users clicking on tabbouleh tens of billions of times, a year and if history is a proxy for the future we did well when Apple deprecated cookies.

Stephen C. Walker: We understand intent, with users clicking on Taboola tens of billions of times a year. In summary, we're coming in strong into 2024 with exciting partnerships, fast revenue growth, and a strong EBITDA and free cash flow profile. We're announcing a new $100 million buyback authorization. And after two years of being soft, we're back to growth as our clients adopt AI faster than any product developed since I started Taboola. With that, let me pass the call over to Steve to review our financials and outlook in more detail. Thanks, Adam. And good morning, everyone.

In summary, we're coming in strong into 2024 with extending partnerships first revenue growth and a strong EBITDA and free cash flow profile, we are announcing a new $100 million buyback authorization and after two years I feel it's been soft we're back to growth as our clients adopt AI faster than any product developed since <unk>.

Started to buhler with that let me pass the call over to Steve to review, our financials and outlook in more detail.

Thanks, Adam and good morning, everyone as Adam mentioned, we had a strong end to 2023, our Q4 revenues were approximately $420 million and grew 13% year over year accelerating from Q3 levels.

Stephen C. Walker: As Adam mentioned, we had a strong end to 2020. Our Q4 revenues were approximately $420 million and grew 13% year-over-year, accelerating from Q3. XTAC gross profit was $169 million, which represented growth of 6% XTAC growth was driven by double-digit growth in advertising and included a small contribution from Yahoo! [inaudible] Net income was $3.7 million, and non-GAAP net income was $31.4 million. Majesty Bidaw's revenue was $50.1 million, representing a 30% Adjusted EBITDA margin.

Ex Tac gross profit was $169 million, which represented growth of 6% year over year.

Ex Tac growth was driven by double digit growth in advertising spend and included a small contribution from Yahoo in the quarter.

These positive factors were partially offset by margin compression due to the add rate declines in 2022, which have since stabilized in 2023.

Net income was $3 7 million and non-GAAP net income was $31 $4 million <unk>.

Adjusted EBITDA was $50 1 million, representing a 30% adjusted EBITDA margin.

Stephen C. Walker: Year over year, Adjusti Bida was down, which was due primarily to higher expenses related to the onboarding of Yahoo's supply that were not in the year ago. However, operating expenses excluding Yahoo would have been relatively flat year over year. Reflecting Strong Costs, For the full year of 2023, we finished with over $1.4 billion in revenue, $536 million in XTAC gross profit, and $99 million in adjusted. We had a net loss of $82 million and non-GAAP net income of $32 million.

Year over year, adjusted EBITDA was down which was due primarily to higher expenses related to the onboarding of Yahoo supply that we're not in the year ago period.

Operating expenses, excluding Yahoo would've been relatively flat year over year, reflecting strong cost discipline in 2023, which we plan to continue into 2024.

For the full year of 2023, we finished with over $1 $4 billion in revenue $536 million in ex Tac gross profit and $99 million and adjusted EBITDA, We had a net loss of $82 million and non-GAAP net income of $33 million. We also.

Stephen C. Walker: We also generated $52 million of free cash flow, which was up 181%. Free cash flow benefited from the stronger-than-forecasted Adjusted EBITDA, which reflects the cost controls mentioned previously. (Inaudible) Free cash flow in Q4 would have been even stronger if not for the timing of some payables and capital expenses, which we mentioned were delayed.

<unk> generated $52 million of free cash flow in 2023, which was up 181% versus 2022.

Free cash flow benefited from the stronger than forecasted adjusted EBITDA, which reflects the cost controls mentioned previously partially offset by the expenses related to the onboarding of Yahoo inventory in the period.

Free cash flow in Q4 would have been even stronger if not for the timing of some payables and capital expenditures that we mentioned were delayed last quarter.

Stephen C. Walker: As Adam said, our strong revenue and XTAC gross profit performance was driven by strength in our e-commerce, bidding, and Taboola, as well as the initial contributions from Yahoo and relatively stable yield. eCommerce had double-digit growth in 2020, driven by strong growth in advertising budgets from some of our largest retail advertisers, as well as strong momentum. In addition, we are seeing great success ramping Taboola, and now Yahoo, as supply sources for our retail. In fact, Taboola's feed supply has become a top 10 traffic source globally for the. As we have stated previously, Taboola News grew very quickly and exceeded $100 million in revenues.

As Adam said, our strong revenue and ex Tac gross profit performance was driven by strength in our e-commerce bidding and <unk> businesses as well as the initial contributions from Yahoo, and relatively stable yields in our core business.

E Commerce had double digit growth in 2023, driven by strong growth in advertising budgets from some of our largest retail advertisers as well as strong momentum in Europe.

In addition, we are seeing great success ramping tabbouleh speeds and now Yahoo as supply sources for our retail advertisers.

In fact, two bullets feed supply hasnt become a top 10 traffic source globally for these advertisers.

As we have stated previously to bullet news grew very quickly and exceeded $100 million in revenues in 2023.

Stephen C. Walker: In total, e-commerce, Taboola News, and header bidding now represent approximately 30% of our ex-TAC gross. This is exciting because each represents very valuable forms of supply that are valued for their high quality. Our teams have achieved accelerating revenue and XTAC performance while improving costs, indicated by our strong adjusted EBITDA margin. Operating expenses were $489 million in 2020, up $11 million year-over-year as a result of the cost incurred to onboard the significant inventory we are gaining with the addition of yachts.

In total E Commerce, Tabbouleh news and header bidding now represent approximately 30% of our ex Tac gross profit. This is exciting because each represents very valuable forms of supply that are valued by high quality advertisers.

Our teams have achieved accelerating revenue and ex Tac performance, while improving cost efficiency indicated by our strong adjusted EBITDA margin exiting 2023.

Operating expenses were $489 million in 2023 up $11 million year over year as a result of the cost incurred to onboard the significant inventory we are gaining with the addition of Yahoo.

Stephen C. Walker: Excluding Yahoo, as I mentioned earlier, operating expenses were essentially flat with the prior year. Our headcount is down approximately 2.5% from its peak in July. With our ongoing expense discipline and our strong growth expectation, we expect that in 2024, we will approach our long-term adjusted EBITDA margin target of 35%. Gap net loss for 2023 of $82 million included amortization of intangibles of $63.9 million, share-based compensation expenses of $53.7 million, and hold-back compensation expenses related to the Connexiv acquisition of $10.6 million, all of which were excluded from non-GAAP.

Excluding Yahoo, as I mentioned earlier operating expenses were essentially flat with the prior year.

Our head count is down approximately two 5% from its peak in July of 2022.

With our ongoing expense discipline and our strong growth expectations. We expect that in 2024, we will approach our long term adjusted EBITDA margin target of 30%.

GAAP net loss for 2023 of $82 million included amortization of intangibles of $63 9 million share based compensation expenses of $53 $7 million and hold back compensation expenses related to the connectivity acquisition of $10 6 million.

All of which were excluded from non-GAAP net income our non-GAAP net income of $32 $6 million was above the high end of our guidance range.

Stephen C. Walker: Our non-GAAP net income of $32.6 million was above the high end of our goal. In terms of cash generation, we had approximately $84.4 million in operating cash flow in 2020 and free cash flow of $52.2 million. This includes net publisher prepayments, which were a source of cash of $19.7 million, and interest payments on our long-term debt, which were a use of cash of $18.5 million. As I have highlighted in previous quarters, I would note that net publisher prepayments were a source of cash for the full year due to the fact that new prepayments were lower than the amortization of historical. Let's turn to the balance. You can see that our net cash balance remains. Our net cash position of $36.2 million remained positive at the end of Q4, even after our cash, cash equivalents, plus our short-term investments decreased from $250.7 million at the end of Q3 to $181.8 million at the end of Q4. This reflected a $50 million prepayment of our debt and $32 million used for share buyback activities. Cash and Cash Equivalents. The short-term investments remained above our debt principal balance of $142 million.

In terms of cash generation, we had approximately $84 $4 million in operating cash flow in 2023, and free cash flow of $52 $2 million. This includes a net publisher prepayments, which were a source of cash of $19 7 million and interest payments on our long term debt.

At which were a use of cash of $18 $5 million.

As I have highlighted in previous quarters I would note that net publisher prepayments were a source of cash for the full year due to the fact that new prepayments were lower than the amortization of historical prepayments.

Let's turn to the balance sheet, you can see that our net cash balance remains healthy our net cash position of $36 2 million remained positive at the end of Q4, even after share repurchases cash.

Cash and cash equivalents, plus our short term investments decreased from $257 million at the end of Q3 to $181 $8 million at the end of Q4. This reflected a $50 million prepayment of our debt and $32 million used for share.

Back activity in Q4.

Cash and cash equivalents and short term investments remained above our debt principal balance of $142 $2 million.

Stephen C. Walker: Speaking of our share repurchases, I would also like to provide an update on our share buyback and debt repayment. The Share Buyback Program was initiated on June 1st, and as of December 30th, we had repurchased over 15 million shares at an average price of $3 per share. (Inaudible) The average repurchase price of $3.62 represented a return of approximately 30% based on our closing price.

Speaking of our share repurchases I would also like to provide an update on our share buyback and debt repayment programs. The share buyback program was initiated on June <unk> and as of December 30, we have repurchased over 15 million shares at an average price of $3 62.

For total repurchases of $55 $1 million.

The average repurchase price of $3 62.

<unk> represented a return of approximately 30% based on our closing price on Monday.

Stephen C. Walker: Today we are also announcing a new share buyback authorization of $100 million that replaces our former buyback plan, which was largely. We are fortunate enough to be able to fund our organic growth investments from our operating cash flow. Given that, we believe that at current valuations, the best use of our free cash flow is to buy back... To the extent that we have additional cash to deploy, we intend to pay down our long-term debt. We did this in October of 2023, in fact, when we voluntarily prepaid another $50 million of our long-term debt, bringing the total debt that As always, both the Share Repurchase Program and the Debt Paydown are contingent upon the availability of sufficient funds. As an Israeli company, we are also required to obtain Israeli court approval for the share sale.

Today, we're also announcing a new share buyback authorization of $100 million that replaces our former buyback plan, which was largely exhausted. We are fortunate enough to be able to fund our organic growth investments from our operating cash flow given that we believe that at current valuations that.

Best use of our free cash flow is to buy back shares to the extent that we have additional cash to deploy we intend to pay down our long term debt.

We did this in October of 2023 in fact, when we voluntarily prepaid another $50 million of our long term debt, bringing the total debt, we have voluntarily prepaid to $141 million.

As always both the share repurchase program and the debt Paydown are contingent upon the availability of sufficient working capital.

As an Israeli company. We are also required to obtain Israeli court approval for share repurchases.

Stephen C. Walker: Also of note, we will be filing a general purpose shelf in the coming weeks. We consider it good corporate hygiene for a company at our stage to have a general purpose shelf. Given we believe our stock is a great value at current levels and have announced a new buyback authorization today, we obviously do not intend to issue new shares. I just wanted to make that, make sure that. Now let me shift to our forward looking. As Adam mentioned earlier, in the last 12 months, we invested in technology that advanced our e-commerce and Taboola newsletters, successfully launched Maximized Conversions, and onboarded all of Yahoo's global native supply onto Taboola. 2023 was a year in which we invested heavily in the, sometimes in advance of rev. As we look ahead, we see the following tailwinds driving outsized growth in our business. First, we expect the Yahoo advertiser migration to be materially complete by Q3 2024 and to continue ramping into 2024. Second, we expect yield growth to turn positive.

Also of note, we will be filing a general purpose shelf in the coming days, we consider it a good corporate hygiene for a company at our stage to have a general purpose shelf on file given we believe our stock is a great value at current levels and have announced a new buyback authorization today, we obviously do not intend to issue new shares.

Shares at this time I just wanted to make that make sure that was clear.

Now, let me shift to our forward looking guidance.

As Adam mentioned earlier in the last 12 months, we invested in technology that advanced our E Commerce and tubular news offerings successfully launched maximize conversions and on boarded all of Yahoo is global native supply onto the two bullet network.

23 was a year in which we invested heavily in these initiatives sometimes in the advance in advance of revenue.

As we look ahead, we see the following tailwind driving outsized growth in our business through 2025.

First we expect the Yahoo advertiser migration to be materially complete by Q3, 2024 and to continue ramping into 2025.

Second we expect yield growth to turn positive in 2024 third we expect a phased the onboarding of the supply from our new iconic consumer brand partner in 2024, and 2025 and lastly, we expect further yield gains over time as the volume of our contextual data increases with the addition of Yahoo.

Stephen C. Walker: Third, we expect a phased onboarding of the supply from our new iconic consumer brand partner in 2024 and 2020. And lastly, we expect further yield gains over time as the volume of our contextual data increases with the addition of Yahoo and other supply to our network, which will further enhance As a result, we are initiating guidance for 2024 that includes strong top-line growth and improving profit. We expect revenue of $1.89 to $1.94 billion, which represents growth of 33%. We expect gross profit of $535 to $555 million and X-stack gross profit of $656 to $679 million. X-TAC is up roughly 25% year over year.

Who and other supply to our network, which will further enhance yield.

As a result, we are initiating guidance for 2024 that includes strong topline growth and improving profitability.

We expect revenue of $1 89 to $1 $94 billion, which represents growth of 33% at the midpoint.

We expect gross profit of $535 to $555 million and ex Tac gross profit of $656 million to $679 million.

Ex Tac is up roughly 25% year over year at the midpoint.

Stephen C. Walker: We are reiterating our 2024 Adjust-Viva-Dog guidance of over $200 million and free cash flow expectation of over $100 million. I will note that the Adjust-the-Bidog guidance represents a doubling of that metric versus. Finally, we are expecting non-GAAP net income of $84 to $104 million. We continue to be very excited by the addition of Yahoo! Adam mentioned earlier, we feel good about the progress with Yahoo, and we expect revenue from Yahoo! to exceed $100 million in cash. For competitive purposes, and due to the fact that Yahoo!

We are reiterating our 2024, adjusted EBITDA guidance of over $200 million and free cash flow expectation of over $100 million.

I will note that the adjusted EBITDA guidance represents a doubling of that metric versus 2023.

Finally, we are expecting non-GAAP net income of $84 million to $104 million in 2024.

We continue to be very excited by the addition of Yahoo to our business Adam mentioned earlier, we feel good about the progress with Yahoo, and we expect revenue on Yahoo to exceed $100 million in Q1 for competitive purposes, and due to the fact that Yahoo supply has been fully integrated into our broader publisher network.

Stephen C. Walker: Since Supply has been fully integrated into our broader publisher network, we will treat disclosures around Yahoo! similarly to how we treat other major publishers on our network going forward. Finally, we are introducing Q1 2024. This quarter, we expect revenues of $387 to $413 million, and gross profit of $94 to $106 million. XTAC gross profit of $123 to $135 million, of $10 to $17 million, and non-GAAP net income of negative $15 million.

<unk>, we will treat disclosures around Yahoo. Similarly to how we treat other major publishers on our network on a going forward basis.

Finally, we are introducing Q1 2024 guidance. This quarter, we expect revenues of $387 million to $413 million gross profit of $94 million to $106 million ex Tac gross profit of $123 million to $135 million.

Stephen C. Walker: Let me finish by saying that we are happy with our fourth quarter performance and excited about the step change growth that we are expecting in our business. The growth investments we have made in 2023, the additional scale that Yahoo! and the additional supply we will be onboarding as part of a new partnership with an iconic consumer brand are accelerating our journey towards becoming a must-buy for advertisers looking to reach. With that, let me pass it back to Adam for some closing. Thanks, Steve.

Adjusted EBITDA of $10 million to $17 million and non-GAAP net income of negative $15 million to negative $3 million.

Let me finish by saying that we are happy with our fourth quarter performance and excited about the step change growth that we're expecting in our business in 2024 the growth investments. We have made in 2023. The additional scale that Yahoo is bringing and the additional supply will be onboarding as part of our new partners.

Adam Singolda: I've never been more bullish about Taboola, and I'm so proud of our Taboola dedication and passion, making us a high-performance company through the most difficult of times. We're coming in strong into 2024, making it a record year for us. Revenue is growing 33% to $2 billion. XTAC is growing 25% to nearly $670 million, and EBITDA is doubling to over $20 million.

<unk> with an iconic consumer brand is accelerating our journey towards becoming a must buy for advertisers looking to reach consumers in the open web.

With that let me pass it back to Adam for some closing remarks.

Thanks, Steve I've never been more bullish about tubular and I'm. So proud of our <unk> dedication passion, making us a high performing company through the most difficult of times.

Adam Singolda: Free cash flow is nearly doubling to over $100 million. And on the back of these numbers, we're announcing an authorization of $100 million for a buyback, essentially looking to buy 6% of our cash. As I mentioned, our industry is changing. And with companies like Netflix and Disney, Uber, DoorDash, Amazon, and more expanding their advertising initiatives, I suspect we are at the beginning of an exciting ad menu that has a chance of becoming the partner of choice to many of them.

We're coming strong into 2024, making it a record year for US revenue is growing 33% to $2 billion ex Tac is growing 25% to nearly $670 million EBITDA is doubling to over $200 million free cash flow is nearly doubling to <unk>.

Over $100 million and on the back of these numbers, we're announcing an authorization of $100 million of buyback essentially looking to buy 6% of our company.

Adam Singolda: And as I said at the beginning of our call, in addition to Yahoo, I'm incredibly excited to have just signed another iconic consumer brand that validates Taboola's advertising in a box value proposition. Our vision is to become the recommendation engine for the open web and build the very first multi-billion dollar gateway for advertisers to reach publishers, OEMs, and apps outside of walled gardens. Today is a good day for us.

As I mentioned, our industry is changing and with companies like Netflix and Disney Uber door Dash, Amazon and more expanding through advertising initiatives I suspect. We are at the beginning of an exciting AD Mennea tabbouleh has a chance of becoming the partner of choice to many of them as I said at the beginning of our call. In addition to you.

Adam Singolda: I'm excited to get 2024 going. To everyone, thank you for being part of our journey. And with that, let's open it up to questions, operator. Thank you. As a reminder, to ask a question, please press star 11 on your telephone. We also ask that you wait to hear your name and company before proceeding with your appointment.

I'm incredibly excited to have just signed another iconic consumer brand that validates <unk> advertising in a box value proposition. Our vision is to become the recommendation engine for the open web and build their very first multibillion dollar gateway for advertisers to reach publishers Oems in apps.

Operator: One moment while we compile the Q&A. Our first question today will be from Andrew Boone of J&P Security. Your line is open.

Outside of wallet guidance today is a good day for us I'm excited to get 2024 going to everyone. Thank you for being part of our journey and with that let's open it up to questions operator.

Andrew M. Boone: Great. Thanks so much for taking the time to answer my questions. Adam, as we think about yield improvements in 2024 and the inflection that you guys are expecting, can you just help us understand what the key drivers are as well as what the products that are your key priorities? And then I want to step back and talk about a big picture question for Yahoo and Taboola. If I go back, and I think about 2022 pro forma revenue of kind of that $2.5 billion of gross revenue. Is that still on the table?

Thank you.

As a reminder to ask a question. Please press star one on your telephone.

We also ask that you wait to hear your name and company before proceeding with your question.

One moment, while we compile the Q&A roster.

Okay.

Our first question today will be coming from Andrew <unk> of JMP Securities. Your line is open.

Great. Thanks, so much for taking my questions.

Adam as we think about yield improvements in 2024 and the inflection that you guys are expecting can you just help us understand what the key drivers are as well as what are the products that are your key priorities in terms of improving yield over the next year.

Adam Singolda: Is that still kind of the roadmap as we think about maybe 2025? Or what are the puts and takes as we think about that benchmark? Thanks so much.

Adam Singolda: Sure. Thanks for the question in the morning, everyone. So, on the yield front, there's a lot going on. As you know, it's our number one investment as a company because we think this drives the most amount of value to our clients, our partners, and to Taboola itself in a competitive way as we're adopting and going after a new business. So, let me just dive in. In 2024, we're starting strong with LEX conversion, already crossing 60% adoption. As a quick reminder, MAX conversion is kind of our AI that allows clients and advertisers to work with us in a similar way to how they work with Google and Facebook, where they don't have to tell us what the CPC they want to bid on or what the CPM they're looking to buy.

And then I wanted to step back and talk about a big picture question for Yahoo, and pool, if I go back and I think about 2022 pro forma revenue of kind of that $2 $5 billion of gross revenue.

Is that still on the table is that still kind of the roadmap as we think about maybe 2025.

What are the puts and takes as we think about kind of that benchmark. Thanks, So much guys sure.

Thanks, Thanks for the question and good morning, everyone. So on the other front there is a lot of going on and as you know, it's our number one in investment as a company because we think disk drive the most amount of value to.

Our clients our partners and suitable itself in a competitive way as we're adopting and going after new business. So let me just dive in into that 2024.

Adam Singolda: They just give us their budget. At times, they give us their target for what the client's worth is, and we do the rest. It's the fastest adopted product since I started Taboola, and it's really fantastic.

Starting strong with less conversion already.

And the 60% adoption as a quick reminder, Max Max conversion is kind of our AI that allows clients and advertisers to work with us in a similar way to how they work with Google and Facebook, where they don't have to.

Adam Singolda: We're seeing great case studies, not only from Taboola's advertisers but now also from Yahoo! advertisers migrating to Taboola's technology. And we're publishing those case studies because we're seeing advertisers that are essentially either able to spend more, or new advertisers that are churning less. And these are really good two metrics for us to follow. I gave a flower example in my letter, but essentially, just from a numbers perspective, we're essentially seeing up to a 50% boost in the amount of conversions at the same price. And at other times, we're seeing the same amount of conversions, but the price is being reduced by 20%. These are serious numbers.

Tell us what is the CPC, the winning bid or what is the CPM to look into Dubai, there just to give us their budgets at times to get us to our target.

What is worth what what are the clients work and we do the rest.

It's the fastest adopted product since I started and it.

It's really fantastic, we're seeing great case studies.

Not only from those advertisers now also with Yahoo, advertisers migrating to Kyprolis technology and Republishing. Those case studies, because we are seeing advertisers that essentially either are able to spend more or new advertisers that are churning less and data.

Really good metric for us to follow I guess in a flower examples on my end.

But essentially just from a numbers perspective, we're essentially seen up to 50% 50% boost in the.

Adam Singolda: And also, just from the client's perspective, the experience they have working with us, it's so much simpler and more easy to do than they have to do with, you know, in the ethical industry, which I would argue, one of the curious heels of the ethical industry is that we're still working with advertisers the way we used to work 30 years ago, whereby everyone around us, mainly platforms and walled gardens, has evolved to using AI. So I want, by the end of this year, the vast majority of Taboola's business, as you know, approaching $2 billion, to be using AI, and CPC and CPM to be kind of a story from the past. What's coming next for us? We're going to launch in H2, Max Revenue. This is, on top of Max Conversion, it's another sophisticated AI bidding strategy, allowing clients that know what the price associated with a purchase is to give us that margin and revenue goals they have, and we optimize for that.

I'll now turn of conversion at the same price.

And in other times, we're seeing the same amount of conversions, but the price has been reduced by 20%. These are serious numbers.

So just from the clients' perspective, they experienced they have working with us. It's so much simpler and more easy to do when they have to deal with.

Epic industry, which I would argue one of the curious heel of the epic industry is that we're still working with advertisers. The way we used to work for 30 years ago, whereby everyone around us mainly platforms walled gardens as evolve to using AI. So I wanted by the end of this year with the vast majority of <unk> business as you know approaching.

$2 billion to be using AI, and CPC and CPM to be kind of a story from the past.

Next for us.

We're going to launch in H two Max revenue. This is on top of next conversion. It's another sophisticated AI bidding strategy, allowing clients that know what is the price associated with our purchase to give us that margin and revenue goals to have and we optimized for that this is going to launch in the second half of the year.

Adam Singolda: This is going to launch in the second half of the year, which will be additive to Max Conversion. Gen AI is continuing to get great adoption by self-service. As you know, I love self-service.

Which will be additive to Max conversion journey II is continuing to get great adoption by self service as you know I Love Self service. This is an opportunity to get to kind of introduce two great. New clients. There are a lot of times, they come small, but they potentially become big and one in every four creative titles and something else.

Adam Singolda: This is an opportunity to get kind of introduced to great new clients, who a lot of times come small, but they potentially become big. And one in every four creative titles and thumbnails, and you just saw with OpenAI, they're now already the industry is talking about video creation, so who knows where that goes. But one in four creatives is using Gen AI, so that's been great.

And you just saw with opening either now already the industry is talking about video creation, so who knows where that goes but 2000 and for.

<unk> credit risk.

Jenny.

So that's been great E Commerce is another.

Adam Singolda: E-commerce is another source of bolstering our yield in 2024. You may have seen that I mentioned in the letter that the Associated Press just chose to launch its e-commerce business. You all know Time.com, you know, advanced, also working in e-commerce with Turnkey and now AP.

Bolstering our yield in place on the floor you may have seen that I mentioned in the letter that I associated press, just chose tableau to margin E Commerce business.

You all know time Dot com.

Advanced also working heavily in e-commerce with turnkey and now AP that was a new announcement today.

Adam Singolda: That was a new announcement today, and all of that is helping us to essentially attract new retailers and improve our basically weighted average yield across the network. Then you add data integration.

And all of that is helping us to essentially attract new retailers and improve our basic basically weighted.

Average yield across the network venue data integration, we're looking to expand our contextual data segments with Yahoo. That's something that I'm very excited about especially in the back half kind of H two cookie deprecation. So thats also going to compound our ability to drive yield and last but not least more advertisers. So we're migraine.

Adam Singolda: We're looking to expand our contextual data segments with Yahoo. That's something that I'm very excited about, especially in the wake of kind of H2 cookie deprecation. So that's also gonna compound our ability to drive yield.

Adam Singolda: And last but not least, more advertisers. So we're migrating advertisers from Yahoo. We expect that to be fully complete in Q3. And these are the best, the creme de la creme, the best of the best.

Advertising from now we expect that to be fully complete in Q3 and these are the best <unk> best of the best you see others Samsung in CD and Horizon. These are fantastic kind of enterprise advertisers all of those things from the technology side, the data side and decline side are compounding our yield expansion.

Adam Singolda: You see others, Samsung and Citi and Verizon. These are fantastic kinds of enterprise advertisers. All of those things, from the technology side, the data side, and the client side, are compounding our yield expansion. And you may have seen also, and I mentioned that earlier in my remarks, that after two years of kind of softness in yield that all of us have experienced in this industry, Taboola, we kind of assume that if nothing happens in the market, we will do better than the market. So we assume that yield is back to growth.

And you May have seen also and I mentioned that earlier in my remarks that after two years of kind of softness in yield that all of us have experienced in this industry to boot.

Assume that if nothing happens in the market, we will do better than the market. So we assume that yield is back to growth in 2024, it's in our budget and our guidance we expect.

Adam Singolda: In 2024, it's in our budget, it's in our guidance, so we expect all of these initiatives to come to fruition. And then, to your second question about the billion-dollar opportunity with Yahoo, the simple answer on that is yes, we still believe there is more than a billion dollars of value in that partnership.

Although these initiatives to to come to fruition.

Yes.

And then to your second question about the $1 billion opportunity with Yahoo. The simple answer on that is yes, we still believe theres more than $1 billion of value in that partnership.

Adam Singolda: By the way, we did say that we expect to see $100 million in revenue from the supply in Q1, so that's encouraging, that's a good step towards that. However, advertisers will be fully migrated only in Q3, so that's also key to capturing the base value of the partnership. And then from there, what we expect is that revenue will continue to grow as we capture synergies to get us to the full billion dollar value. So yes, we expect it; it'll happen over time. Thank you so much.

By the way, we did say that we expect to see a $100 million in revenue from the supply in Q1. So that's encouraging that's a good step towards that.

Advertisers will be fully migrated only in Q3. So that is also key to capturing the face value of the partnership and then from there. What we expect is that the revenue will continue to grow as we capture synergies to get us to the full $1 billion value. So yes, yes, we expect that it will happen over time.

Thank you so much.

Operator: Thank you. One moment for the next question, and our next question will be coming from Jason Helfstein of Oppenheimer. Your line is open.

Yeah.

Thank you one moment for the next question.

Yes.

And our next question will be coming from Jason how fine of Oppenheimer. Your line is open.

Jason Stuart Helfstein: Hey everybody, just some clarification and then a question. So, to be clear, the $100 million in Yahoo is not cumulative; that's like for the first quarter, correct? Correct, that's 100 million for Yahoo's supply in Cuba. And then you said the fourth quarter, obviously it was meaningfully below that, you're not giving a number, but we have to guess, just repeat the language you said, how much it was, like the way you described it in the fourth quarter?

Hey, everybody just some clarification and then a question so to be clear so the $100 million in Yahoo. That's not cumulative that's like for first quarter correct.

Correct, that's a 100 million on Yahoo supply.

And then you said the fourth quarter, obviously, it was meaningfully below that youre not giving a number.

But we have to guess.

Repeat the language you said how much at what like the way you described it in the fourth quarter, when we said low tens of millions.

Stephen C. Walker: We said low tens of millions. Okay, so I mean, like, kind of hit the elephant in the room here. I mean, if you play around with the math, that means that, like, the kind of, you know, ex-Yahoo, the business is accelerating, but like, that's not really fair, right? Because at the end of the day, you have a certain amount of advertiser demand, there's different publishing sources, different yields you're trying to get. So just how should we all look? We're gonna all kind of play with math for the next year to look at the, you know, kind of the with and without Yahoo impact, like, how are you thinking about that? Because, you know, I don't think you're describing the business as like slowing down. How do you think about the puts and takes around, you know, bringing that inventory in, kind of like, you know, the And like, you know, should we be doing that math on the growth of ex-Yahoo? And then just one quick follow-up on identity. Okay, so I'll take that first question, and it's a good question.

So I mean like so we've kind of hit the elephant in the room here I mean do you play around with the math that means that like the kind of ex.

<unk>, who is the business is decelerating, but like that's not really fair right because the end of the day you have.

Certain amount of advertiser demand.

Aren't publishing sources different yields youre trying to get so just how should we all look we're going to all kind of play with math for the next year to look at the.

Kind of with and without Yahoo impact like how are you thinking about that because.

I don't think youre, describing the businesses like slowing down so just how do you think about like the puts and takes around.

Bringing that inventory in kind of like the yields you get out of that versus other inventory and light.

Like should we be doing that math.

The growth ex Yahoo, and then just one quick follow up on identity and cookies.

Okay.

The first question.

Stephen C. Walker: So, first of all, we're growing nearly $500 million in top-line revenue this year, 33% year-over-year, so obviously, strong growth. A good chunk of it is Yahoo!, but not all of it. As you know, the complexity of that is that Yahoo!

Good question.

So first of all we're growing nearly $500 million in top line revenue. This year, so 30%, 33% year over year. So obviously strong growth a good chunk of it is yahoo, but not all of it as you observed the complexity of that is that Yahoo comes with both supply and advertise.

Stephen C. Walker: comes with both supply and advertiser demand. In the $100 million that we just talked about, that is Q1, and that's revenue from the Yahoo! supply, but it's a mix of Taboola advertisers and Yahoo!

Their demand.

In the $100 million that we just talked about that as Q1 and Thats revenue on the Yahoo is supply.

But it's a mix of tabbouleh advertisers and Yahoo, advertisers, so where the topline growth comes from over time is also migrating the Yahoo advertisers over and growing our overall advertiser base. Thanks to this really great high quality supply we ask so in order to get full growth we need to go there.

Stephen C. Walker: advertisers. So, where the top line growth comes from over time is also migrating Yahoo advertisers over and growing our overall advertiser base thanks to this really great, high quality supply we have. So, in order to get full growth, we need to go there. That's wave one, and we expect to have the advertisers migrated by Q3, and then, as I mentioned before in answer to Andrew's question, then wave two is to start to grow the synergies to get to the full billion dollars of value. So, you are correct that it's not as simple as you just bring over the supplies and you're done.

Wave one and.

And we expect to have the advertisers migrated by Q3, and then as I mentioned before in answer to Andrew's question. Then wave two is to start to grow the synergies to get to the $4 billion of value.

So you are correct that it's not as simple as.

Adam Singolda: We have to bring in the advertisers. It's more complex. So, that's kind of the way to think about it, and you're right. Our core business is still growing. It's just that Yahoo will take time to get to the full ramp. And then, just on identity, you've talked in the past that you're not dependent on cookies. And so folks should be less concerned about kind of where we go from here. However, you know, there are going to be more identity metrics that are obviously going to be adopted and coming to the market, third-party metrics, like, you know, can you use those metrics to drive kind of even more yield, even though you don't need to use identity? Thanks.

<unk>.

You just bring over the supply and Youre done we have to bring over the advertisers. It's more complex. So so that's kind of the way to think about it and you are right. Our core business is still growing.

It's just that.

<unk>, who will take time to get to the full ramp.

And then just on identity you've talked in the past that you are not dependent on cookies, and so folks should be less concerned about kind of where we go from here. However.

Theres going to be more identity metrics, obviously, youre going to be adopted in coming to the market third party metrics.

Can you use those metrics to drive kind of even more yield even though you don't need to use identity. Thanks.

Adam Singolda: Yeah, I think, you know, we'll take, the way I think about it is from a downside protection perspective in terms of risk that companies might have. We believe the risk is mitigated for two reasons. One, we have the past with Apple deprecated cookies in 2020, and we did well. In fact, we actually accelerated yield. So that's good.

Yes, I think we'll take do I think about it is.

From a downside protection in terms of risk that companies might have we believe the risk is mitigated for two reasons. One we have the past when Apple deprecated cookies in 2020, and we did we did well in fact, we actually accelerated yield. So that's good and the second thing is that we have a large amount of first party cookies today as we start we reached 600 million people a day.

Adam Singolda: And the second thing is that we have a large number of first-party cookies today, as we store, you know, we reach 600 million people a day, and people click on Taboola tens of billions of times. So we think we have a good kind of setup for cookie deprecation. So the way I think about it is, we can do well and potentially even grow because, again, past demand came to us when it couldn't find other channels, and we were a good channel to spend money on. If there's anything in the market that can accelerate that even further, we'll take it. I just don't personally, you know; I feel comfortable because we don't need any new solution to do well.

And people to click on the table up tens of billions of times. So we think we have.

A good a good kind of setup for cookie deprecation. So from the way I think about it is we can do well and potentially even grow because again in the past other demand came to us when it couldnt find other channels than we were a good channel to spend money on if there. If there is anything in the market that can accelerate that even further will take I just don't personally I feel.

<unk>, because we don't need any new solution to do well I think we have written what we need to cross that bridge successfully to our publishers and advertisers and again just as a reminder, the vast majority about 90% of our revenue comes from clients, who buy from to Biller direct.

Adam Singolda: I think we have what we need to cross that bridge successfully with our publishers and advertisers. And again, just as a reminder, the vast majority, about 90% of our revenue, comes from clients who buy from Taboola Direct. No programmatics, no agencies, which means that we have pixels on their pages. So when someone moves from our publishers to their pages, we know we drove that conversion. So that's why we don't need third-party cookies to demonstrate value to clients as they buy from us. This is a fundamental point. I feel there's potentially even further upside to yield, but the downside is mitigated. Thank you. Thank you.

Kinetics and the agencies.

Which means that we have pixels on their pages. So when someone moves from our publishers to their pages. We know we drove that conversion. So thats why we don't need third party cookies to demonstrate the value to clients as they buy from us.

This is a fundamental important there is potentially even further upside to yield but the downside is mitigated.

Thank you.

Operator: One moment for the next question. Our next question will be coming from Laura Martin of Needham and Company. Your line is open.

Thank you one moment to the next question.

Okay.

Yes.

Our next question will be coming from Lora.

Martin of Needham <unk> Company. Your line is open.

Laura Anne Martin: Good morning, you guys. My first one is about politics. So globally, there's a really strong election cycle going on in 2024. And can you remind us how that impacts your impression growth and your leadership, and how that flows through to revenue in a political year, please? And I'll ask my second one after that. Good morning, Laura. Thanks for the question. Hey, what's up?

Good morning, you guys.

My first one is on political so globally, there's a really strong election cycle going on in 2024, and can you remind us how that impacts your impression growth in your leadership and how that plus.

In a political year please.

And I'll ask my second one.

Good morning. Thanks.

Thanks for the question.

Adam Singolda: So, the way we think about it, historically, we did see some bump, you know, in kind of demand coming during the political season, but especially for video, we saw a more kind of increase in video demand. But in our guidance and the way we kind of like manage the business, we don't assume that it's coming. So, we kind of want to be conservative in terms of what might happen.

So the way we're thinking about historically, we did see some bumps in the kind of demand coming on political season, especially from video with some more kind of increasing video demand in our guidance and we kind of manage the business. We don't assume that is coming.

We kind of want to be conservative in terms of what might happen Theres also potential acceleration in traffic because theres more viewership and things of that nature again, we don't assume those things as a material.

Adam Singolda: There's also potential acceleration in traffic because there's more viewership and things of that nature. Again, we don't assume those things as a material, you know, kind of a financial benefit to us. But historically, we did see some, you know, nice bumps.

Kind of like a financial benefit to us, but historically, we did see some nice bumps, but again nothing too significant that we would like to sort of embed in our planning.

Laura Anne Martin: But again, nothing too significant that we would like to sort of, you know, embed in our planning. Okay, so that's an upside driver because it's not in the numbers. It's helpful. By the way, they're talking about $17 billion of spending in the U.S. alone, so I think it might be a bigger political year than people in the near historical list.

Okay. So that's an upside driver.

Helpful.

By the way, they're talking about 17 billion spending in the U S alone I think it might be a bigger political upheaval and then your historical lift.

Adam Singolda: The second question I had for you, Adam, is I'm really curious as you bring over these new types of advertisers that Taboola never had with Yahoo, like Verizon and Citi, these big enterprise, high-quality branding customers, does that, and I'm really interested in what kinds of challenges or what kinds of things they need that your historical advertisers have not had. And secondly, does it give you a new product idea when you think about the product roadmap? Are there things these types of advertisers are asking for that could, if you develop them, could really forever accelerate the trajectory of revenue growth for Taboola? What's your point of view on that?

Second question I had for you Adam is I'm really curious as you bring algorithms new.

Types of advertisers to go with more of a hat with Yahoo, like Horizon City Big Enterprise high quality branded customers.

I'm really interested in what kinds of challenges or what kinds of things they need that your historical advertisers have not and secondly does it give you a new new product idea. When you think about the product roadmap are there things the types of advertisers are asking for that could sort of.

Develop them could really forever accelerate the trajectory of revenue growth.

Adam Singolda: Yeah, this is such a good question because obviously this is a very new type of segment of clients that get introduced to Taboola. Most of it right now is on the Yahoo side, right, like we're filling that incredible kind of publisher with a mix of Taboola and Yahoo advertisers, but what we're seeing is first of all, they really appreciate the technologies we can bring to the table, so they're adopting Max Conversion, you know, our pixels, and these are new things to them, and it allows us and our account managers to, and I sit a lot with our account managers almost daily to see the graphs and to see the trends, and these are really good trends, both in terms of increase of budgets and performance as it relates to, you know, conversion rates and CPA, so it's early days, you know, it's only $100 million, so it's still early days, but I'm seeing really good things, and they're very happy, so these clients want to spend time with us, and the Yahoo team, and this is all good beginning.

What's your point of view on that.

Yes.

It's such a good question because we obviously this is a very new type of segments of clients that.

Getting introduced to boot up most of it right now is on the outside right like we're filling that incredible kind of publisher with a mix of <unk>.

Advertisers.

That's what we're seeing is first of all they really appreciate the technologies, we can bring to table so they're adopting Max conversion.

Sure <unk> and these are new things to them and it allows us and our account managers to and a lot of account managers, our daily to see the graph and you'll see the trends and these are really good trends both in terms of increase of budgets.

And performance as it relates to conversion of licensed CPA.

It's early days, it's only $100 million.

Early days, but I'm seeing really good things and they're very happy. So these clients want to spend time with us and to our team and this is all good begin where I think it's going is this potentially will allow us to develop new formats and kind of new experiences that those clients are.

Adam Singolda: Where I think it's going is this potentially will allow us to develop new formats and kind of new experiences that those clients are used to getting, either historically from Yahoo or on other channels, and I think that might open up a whole new way users would experience sponsored content and ads on its own network, as well as in Yahoo over time, so I would say, you know, stay tuned for potential UX innovation and formats and experiences that those brand advertisers are looking for that we are yet to offer, so I do think they might make us even better, those clients, and we try to be humble, we're learning, we're asking questions, and we're spending time with them, but I'm excited mainly about the performance, that's the most important thing, but I'm sensing they would like us to further develop the way we present ads on the open web, and that might affect not only our relationship with Yahoo, but further how we render ads across our entire network, you know, Disney, and NBC, and the rest of our great partners. Thanks very much.

Are used to getting either historically from Yahoo, or on other channels and I think that might open up a whole new way users would experience sponsored content and ads on its network as well as in Yahoo. Over time, So I would say stay tuned for potential U S innovation and formats and experiences that those brand.

We're looking for that we are yet to offer.

They might make us even better those clients and we tried to we tried to be humble and we're learning we're asking questions.

And we're spending time with them, but im excited mainly about the performance thats the most important thing but.

They would like us to further develop the way we present ads on the open web and thats might affect not only our relationship with Yahoo.

How we render ads across our entire network of Disney and NBC and the rest of our great partners.

Thanks very much.

Operator: Thank you. One moment for the next question. Our next question will be coming from James Kopelman, of TD Carowind. Your line is open. Good morning. Thanks for taking the questions. The first one is for Adam.

Okay.

Thank you one moment for the next question.

Okay.

Our next question will come from James Kopelman.

Of TD Cowen Your line is open.

Good morning, Thanks for taking the question. The first one is for Adam.

James McGee Kopelman: In the letter, you referenced the amount of contextual data that Taboola has for AI and deep learning. Can you talk about how you view Taboola's growing data set as a differentiator when it comes to training AI and leveraging generative AI over time? And then, I have a follow-up question for Steve.

Letter you referenced the amount of contextual data that <unk> has for AI and deep learning can you talk about how you view bull as growing data set as a differentiator when it comes to training AI leveraging generative AI over time, and then I have a follow up for Steve.

Adam Singolda: Yeah, sure, so as it relates to just the amount of data we have, I think the most important thing, and I speak a lot about becoming the must-have for the open web, And what I mean by that is, it's a matter of how big your actual gross revenue and your spend is because this is a good proxy for how reliant advertisers have become on you because you're big enough that it's worth their time to spend money with you. Because again, I think today the ad tech industry is a bit fragmented, or too fragmented for advertisers to rely on you. And I'm looking at companies like Snapchat, Pinterest, and X. It's in the $2 to $4 billion range, and now we're getting into that range.

Yes sure so.

As it relates to just the amount of data we have I think the most important thing and I can I speak a lot about becoming a must buy for the open web and what I mean by that is it.

It's a matter of how big is or actually gross revenue in your spend because this is a good proxy for how relying advertisers become a new because we are big enough that it's worth their time to spend money with you because again I think today the AD tech industry is a bit fragmented or to fragment for advertisers, who rely on you and I'm looking at companies, except China and interest in <unk>.

It's in the $2 billion to $4 billion range and now we're getting into that range. So I think first of all the most important thing to become a must buy is growing revenue and become get that flywheel going so that advertisers want to work with you and it's worth our time to that.

Adam Singolda: So I think, first of all, the most important thing to become a must-buy is growing revenue and getting that flywheel going, so that advertisers want to work with you, and it's worth their time. Two, the footprint we have, and the code on the page Taboola has, I would argue is probably the largest on the open web or in the world. I don't know of any company that has a first-party relationship with publishers like Taboola at our size, which really gives us first-party access to everything that takes place on the page, from context, to scrolling, to clicks, to purchases, to things of that nature. And I think that's growing exponentially, obviously, with Yahoo. So this is, I think, one of the most important assets the company has, which is code on page exclusively for the long-term.

The footprint, we have an accordion on page two I would argue is probably the largest in the open web or in the world I don't know of any company that had.

First vendor relationship with publishers like table at our site, which really gives US first party access to everything that takes place on the page from context to scoring duplex to purchasing things of that nature.

And I think thats growing exponentially, obviously with Yahoo. So this is this is.

One of the most important assets. The company has which is code on page exclusively for long term and this is what gives US also predictability of the business to know that we don't expect any big shift one way to the other and then as we look into <unk>.

Adam Singolda: And this is what gives us also predictability as a business, to know that we don't expect any big shift one way or the other. And then, as we look into Gen AI, I think it's important to kind of reference what exactly Gen AI can do for the market. Gen AI is eventually going to be a technology that is available to everyone. What's going to make a difference from one company to the next is really the amount of data and the type of data you can feed into the engine, so you can get better outcomes.

I think it's important to kind of reference what exactly is Jane Jenny I can do to the market. Jenny I eventually is going to be a technology that is available to everyone was going to make a difference from one company to the other is really the amount of data and the type of data you can prompt into the engine. So it can get better outcomes such as <unk>.

Adam Singolda: So as an example, when an advertiser comes to Taboola and suggests thumbnails and titles for me, we are able to say, well, we've seen, let's take an example, an insurance client comes to Taboola; we're able to say, we've seen a billion dollars of insurance spent over the last few years, and we can prompt that into the engine. And then we get really great kinds of authentic and new and original titles and thumbnails we can suggest to the client. So I think what makes us special here is the amount of data we have, and our size. And this is also why I love the Yahoo partnership. And as I mentioned in the letter, there's another iconic consumer brand that is signed and starting to roll with us.

Temple when an advertiser comes to tableau and says.

Somehow is entitled for me, we are able to say well we've seen let's say, let's take an example in insurance clients comes to tableau, we're able to say we've seen a $1 billion of insurance spend over the last few years and we can prompt that into the engine and then we're getting really great kind of a syndicate.

Our fintech or new and original titles in ton miles. We can suggest a decline. So I think what makes US special here is the amount of data we have our size and this is also why I love the Yale partnership and as I mentioned in the letter there's another iconic consumer brand that is signed and starting to roll with US all of those will give us more data to pumped into the journey.

Adam Singolda: All of those will give us more data to prompt into Gen AI. And we have a senior person leading Gen AI now, Taboola. And I can tell you we're working on very exciting things because I believe that the biggest opportunity Gen AI has for the advertising industry is to simplify the experience of buying ads. Today, it's very, very complicated to succeed. And I think Gen AI can make it really simple.

And we have a senior person leading <unk>.

And I can tell you we're working on very exciting things because.

I believe that the biggest opportunity journey has to the advertising industry is to simplify the experience of buying ads today is that it's very very complicated to succeed I think Jenny I can make it really simple. So so what's to come is our unique data into <unk> and producing special creative that others don't have.

Stephen C. Walker: So what's to come is our unique data into Gen AI and producing special creatives that others don't have. And then, for Steve, at a high level, how should we think about the seasonality of both gross revenue and EXPAC in 2024, given the various moving parts around Yahoo, the new... Publishing Partner, and your typical historical seasonality? And then finally, I just want to ask about OpEx efficiencies. What are some of the ways that you're able to limit headcount increases this year, even as you scale?

And then for Steve high level, how should we think about the seasonality.

Both gross revenue and ex Tac in 2024, given the various moving parts.

Yes.

Named publishing partner in your typical historical seasonality and then finally just wanted to ask about Opex efficiencies what are some of the ways that youre able to limit headcount increases this year, even as you scale. Thank you.

Stephen C. Walker: Thank you. So in terms of seasonality, Yahoo is like a very large publisher in our traditional core business. I think their seasonality is very similar to our historical pre-Connexity seasonality.

So in terms of the seasonality. So Yahoo has like a very large publisher in our traditional core business. So I think there are seasonality is very similar to our historical pre connectivity seasonality.

Stephen C. Walker: So that's the way to think about adding them to our network. As a company, as you know, we've become more and more fourth quarter dominant because of our e-commerce business in particular. And this year, obviously, with the bringing on of Yahoo over the course of the year, we'll be more back half loaded than usual as well. But generally, the way to think of seasonality with Yahoo is that it's like a large publisher. And they have very similar seasonality to other large publishers. You know, they're number one or number two in news, sports, and finance. And that is pretty much what the kind of core of our base is. So that's the way to think about seasonality.

So that's the way to think about adding them to our network as a company as you know we've become more and more fourth quarter dominated because of our e-commerce business in particular and this year, obviously with the bringing on Yahoo. Over the course of the year will be more back half loaded than usual as well, but <unk>.

Really the way to think of seasonality with Yahoo is it's like a large publisher and they have very similar seasonality to other large publishers.

They are number one or.

Number two in news sports finance.

And that is pretty much what the kind of core of our basis. So that's the way to think about seasonality in terms of Opex and how we control head count here, Yes, I think we've shown pretty good cost discipline over the course of the last year I mentioned in my prepared remarks that our Opex for Q4 and in fact for all of 2023 would have been.

Stephen C. Walker: In terms of OPEX and how we control headcount here, you know, I think we've shown pretty good cost discipline over the course of the last year. I mentioned in my prepared remarks that our OPEX for Q4 and, in fact, for all of 2023 would have been flat year over year, except for the hiring that we did for Yahoo to support that. I would expect that our fourth-quarter OPEX base is probably going to be similar to what it is for the rest of this year.

Flat year over year.

Except for the hiring that we did for Yahoo to support that.

I would expect that our fourth quarter Opex space, who is probably going to be similar to what it is the rest of this year. There may be a slight increase as a result of some additional hiring that we have to do for Yahoo, but we're really working on kind of keeping a lid on costs.

Stephen C. Walker: There may be a slight increase as a result of some additional hiring that we have to do for Yahoo, but we're really working on kind of keeping a lid on costs. And, you know, the way we do that is we find deficiencies, and we find ways to leverage the people we have to do more. Frankly, we're using generative AI and other AI tools internally now to generate productivity and to improve things. So, for a great example, that is exactly what Adam talked about. Historically, our account managers who support our advertisers used to spend a lot of time helping the advertiser figure out things like what's a good headline, what's a good creative or image for this ad. Now we have generative AI tools that help them do it, and they can generate a dozen of them instantly. Whereas it used to take, you know, a lot of thought and a lot of time to come up with a dozen.

And the way, we do that as we find efficiencies and we find ways to leverage.

The people we have to do more frankly, we're using generative AI and other AI tools internally now to generate productivity and improving so for and a great example of that is exactly what Adam talked about historically, our account managers, who support our advertisers used to spend a lot of time, helping the advertiser or figure out.

What's a good headline what the good creative or image for this AD now we have generative AI tools that help them do it can generate a dozen of them instantly, whereas it used to take a lot of thought and a lot of time to come up with a dozen so it's it's all about productivity finding ways to leverage.

Stephen C. Walker: So it's all about productivity, finding ways to leverage your people, you know, across more accounts. I think we're doing a pretty good job of that. Great. Thanks, guys. I appreciate all the color.

People.

Across more accounts I think we're doing a pretty good job.

Operator: Thanks, James. Thank you. One moment for the next question. Our next question will be coming from Dan Day, of B. Rowan Security. Your line is open. Yeah. Morning, guys, and thanks for taking the questions. So this iconic consumer brand that you've mentioned here, is it possible to say whether it's a traditional open web publisher that you typically partner with, but maybe on a bigger scale? So, you know, you feel like it's worth specifically calling out or maybe like a new type of partner.

Thanks, guys I appreciate it.

Thanks James.

Thank you one moment for the next question.

Our next question will be coming from Dan day.

I'll be wrong security your line is open.

Yeah morning, guys and thanks for taking the questions.

This iconic consumer brand that you've mentioned here.

Possible to say whether it's.

Traditional open web publisher that you typically partner with but maybe on a bigger scale you feel like it's worth specifically calling out are.

Dan Day: I'm thinking something like a retail media network or a company, you know, maybe new to the advertising business or something along those lines. And then if there's any prepayment or anything else that could impact cashflow associated with this publisher. We can't say the name; it's not a traditional publisher, so it's an iconic brand that signed Rolling Out with us. I don't think we can mention the name, but I hope we can mention that.

Maybe like a new type of partner I'm thinking something like a retail media network or a company may be new to the advertising business or something along those lines and then if there is any prepayment or anything else that could impact cash flow associated with them.

We can say the name it's not it's not a traditional publisher.

So it's an iconic brand that.

And then Simon Rolling out with US I don't think we can mention the name, but I hope we can mention that some.

Stephen C. Walker: Okay, great. So. Question: It seems like every week since you last reported, we're hearing about layoffs at open web publishers, how much this industry is really struggling to survive for a lot of them, especially how they're struggling to generate traffic off search and social at anywhere near the level they used to. So, given you're in part dependent on them generating traffic to their properties, how do you think about that as either a headwind or an opportunity for you to help Sorry Daniel, I missed part of that question. Can you give it to me again?

Okay great.

<unk>.

So.

It seems like every week for since you last reported we're hearing about layoffs at open web publishers, how much. This industry is really struggling to survive for a lot of them.

Especially how they're struggling to generate traffic of search and social it anywhere near the level. They have in the past so given you're in part dependent on them generating traffic to their properties. How do you think about that as a headwind an opportunity for you to help them.

Through these struggles.

Sorry, sorry, Daniel I missed part of that question could you give it to me again.

Dan Day: Yeah, yeah, just generally like open web publishers struggling, you know, a lot of them going through layoffs. [inaudible] Sure. So I can take this one.

Yes, yes, just generally like open web publishers struggling a lot of them going through layoffs.

Struggling to generate traffic. So just how you think about your role as an AD tech partner here.

And helping them continue to generate traffic and what you can do there.

Adam Singolda: So overall, on our network, we're not seeing any material impact on our network to date. I think also many of our publishers are enterprise big publishers that have a lot of direct traffic. So to date, we haven't seen any material impact.

Sure. So I can take this one several were on our network were not seen any any material impact today to thank also many of our publishers are enterprise big publishers that have a lot of direct traffic. So.

To date, we haven't seen any material impact.

Adam Singolda: And then also, I think this is an opportunity for us because the way we approach working with publishers is really at the most strategic level, whereby they're able to use our homepage for you to drive homepage personalization. They're able to use our e-commerce business to drive kind of diversification of revenue, and subscription. We have match AI to help them kind of personalize a page once users land on it.

And then also I think this is an opportunity for us because the way we approach working with.

With publishers.

The most strategic level, whereby they're able to use our homepage for you to drive homepage personalization.

<unk> is our e-commerce business to drive kind of diversification of revenue is subscription and we have met your AI to help them kind of personalize a page one says of lens on it and I think if you're a publisher, especially if youre a senior person on the publisher side, our senior product manager. When you think about who do you want to white grid did you just want to make sure that you can work with companies that can.

Adam Singolda: And I think if you're a publisher, especially if you're a senior person on the publisher side or a senior product manager, when you think about who you want to work with, you just want to make sure that you can work with companies that can drive audience growth because you're concerned about that going down. You want to make sure you work with companies that can increase your engagement with consumers and then, as well as kind of like your ARPU or your lifetime value. So I think this is such an important distinction we have. I can tell you that I just had a call a week ago from a fairly big publisher, from the CEO. And the CEO asked me, you know, what about Taboola News? Are we getting Taboola News as part of the deal?

And drive audience growth, because you're concerned about that going down you want to make sure you work with companies that can increase your engagement with consumers.

And then as well as connect or <unk> or lifetime value. So I think this is such an important differentiation. We have I can tell you I just had a call.

Week ago, with a fairly big publisher.

From the CEO and the CFO asked me.

Adam Singolda: And I said, well, of course. And I said, you know, but we have to work for a long time because we can't just put people on and off. And the entire conversation was about added value. It wasn't about CPMs.

What about similar news or we gained 200 as part of the deal and I said well of course and have said, but we have to work for a long time, because we can just.

People on and off and the entire composition was about added value. It wasn't <unk>. It wasn't about yields so isn't about guarantees it wasn't much Rev share. It was about other things publishers are thinking about so this is to me such a fun part of my job as well as an exciting moment that publishers wanted to work with us because all of the technology invest.

Adam Singolda: It wasn't about, you know, yields. It wasn't about guarantees. It wasn't about redshirting.

Adam Singolda: It was about other things publishers are thinking about. So this is, to me, such a fun part of my job, as well as an exciting moment that publishers want to work with us because of all of the technology investments we make beyond just money.

Once we make beyond just money.

Dan Day: Okay, great. So back to your first question about the iconic consumer brand, I checked with our PR folks, and what we're allowed to say is that we were selected by Apple as an official advertising partner for Canada and Australia at this point, so I think that's what we're allowed to say. Okay, awesome. Yeah, good to hear.

Okay great.

Okay.

Question about the iconic consumer brand I checked with our PR folks and what we're allowed to say as we were selected by Apple as an official advertising partner for Canada and Australia at this point.

So I think that's what we're allowed to say.

Okay awesome okay.

Good to hear.

Stephen C. Walker: Thanks, guys. Thank you. One moment for the next question, and our next question is coming from Justin Patterson of Key Bank. Your line is open; bigger brands that are opening up, like Yahoo! originally and then now Apple in there. It seems like this is just a new opportunity for Taboola to power a lot more of these bigger brands. I guess, you know, one thing, just what's really changed around that? Was it just Yahoo!

Thanks, guys.

Thank you one moment for the next question.

Okay.

Our next question is coming from Justin Patterson.

Of Keybanc your line is open.

Great. Thanks for the question I, just wanted to up level the conversation a little bit around these bigger.

Bigger brands that are opening up like Yahoo. Originally and then now Apple in there. It seems like this is just a new opportunity to power a lot more of these bigger brands I guess, one just what's really changed around that wasn't just Yahoo about open.

Adam Singolda: that opened this door over the past year? And then two, as you've gone through Yahoo!, how do we think about just the incremental investment to support more of these brands, win more business, and scale up over time? First of all, I can't believe the CFO was able to break the news about Apple. We're going to have to talk about that afterwards.

The door over the past year, and then two as you've gone through Yahoo. How should we think about just the incremental investment to support more of these brands to win more business and scale up over time. Thank you.

I'll start today first of all I can't believe the CFO was able to break the news about Apple Steve.

Steve We went out to talk about this afterwards.

Adam Singolda: But obviously, we're very excited about Apple choosing Taboola for this exciting market. So to your question, I think, for me, what's fascinating is that you can already see companies like Amazon and others speaking about advertising being the second or third line of eBay that they have. So the trend is that advertising is going to become a trillion-dollar market, and I believe board members of all Fortune 500 companies are going to ask their CEOs, what is your advertising strategy? Because it's too big.

But obviously, we're very excited about aperture detour.

It is into this exciting market.

Your question I think to me, what's what's fascinating is that you can already see companies like Amazon and others speaking about advertising being the second or third line of EBITDA that you have so the trend is that advertising is going to become a trillion dollar market and I believe board members.

All fortune 500 companies are going to accuracy of what is our advertising strategy, because it's too big and a few rich consumers cannot be ignored not only that it can be a fantastic if not one of the most lucrative growth engines for fortune 500 companies.

Adam Singolda: And if you're rich consumers, it cannot be ignored. Not only that, it can be a fantastic, if not one of the most lucrative growth engines for Fortune 500 companies all around the world. Now, I think the way it's going to pan out is that many of these great companies would want to sell directly to the top of the market. They would like to build relationships and enterprise accounts. However, there are two things that would be missing.

All around the World now I think the way it is going to Pan out is that many of these great companies would want to sell.

Sell directly to the top of the market, we'd like to build relationship with enterprise accounts. However, there are two things that would be missing one.

Adam Singolda: One, it's unlikely they're going to sell to tens of thousands or hundreds of thousands of performance-based mid-funnel advertisers. And the second thing is that it's unlikely they'll develop a technology that is able to use AI and data and matchmake between users and ads in a way that works for advertisers to continue to buy. And this is exactly, I think, where Taboola has an opportunity, which I'm very excited about. I mean, I never knew, I never thought a few years ago that we would be in a position where we announce a billion-dollar partnership with a great company like Yahoo. And now, you know, Steel stole my thunder, but now Apple chose Taboola.

Likely youre going to sell to tens of thousands or hundreds of thousands performance mid funnel and advertisers and the second thing is that it's unlikely they'll develop a technology that is able to use AI and data.

Matchmaker between users and ads in a way that works for advertisers to continue to buy and this is exactly I think portable hasnt opportunity, which I'm very excited about I mean, I never knew I never thought three years ago will be in a position, where we announced a $1 billion partnership with a great company like Yahoo, and now Steve.

Stole my Thunder, but now Apple chose to go and I think this potentially can become an opportunity for the company.

Adam Singolda: And I think this potentially can become an opportunity for the company to kind of be this ad engine or call it advertiser in a box for all these companies that say, well, we should get a billion dollars or more from the advertising space. So I'm excited about it. This is more than I ever thought would happen, but I do think it's happening.

To kind of be the engine.

Core I'll call it the advertiser in a box for all of this company as they say well, we should get $1 billion Omar.

The advertising space. So I'm excited about it this is more than I ever thought would happen, but I do think it's it's happening again, we're seeing exciting partnership Pinterest with Yahoo, Netflix with Microsoft This is really.

Adam Singolda: Again, we're seeing exciting partnerships, you know, Pinterest with Yahoo, and Netflix with Microsoft. This is really a whole new beginning, in my opinion, and I hope we can play a big part in it. In terms of, uh, sorry. In terms of the incremental investment required to support these types of partnerships, I guess what I would say is the reason I think we're winning some of these great partnerships is because we have invested so much in our performance advertising capabilities. And while I think we have a long ways to go, I still consider us in the early innings here in terms of being great.

A whole new beginning in my opinion and I hope, we can play a big big part of it.

In terms of ramp.

Ramp up.

Sorry.

No go ahead, sorry, Steve I'm sorry.

In terms of incremental investment required to support these types of partnerships I guess, what I would say.

The reason I think we're winning some of these great partnerships is because we have invested so much in our performance advertising capabilities and and while I think we have a long ways to go I still consider us in the early innings here in terms of being great.

Stephen C. Walker: We are world class at it, and I think that's what helps us win these partnerships. Obviously, every partnership we do of significant scale has some unique requirements. Yahoo was definitely learning from their, as Adam mentioned earlier, were learning from their advertisers things that they would like. Maybe they got some of it from Yahoo previously.

We are world class at it and I think that's what helps US win. These partnerships. Obviously every partnership we do of significant scale has some unique requirements Yahoo. We're definitely learning from there as average Adam mentioned earlier, we are learning from their advertisers things that they would like maybe they got some of it.

Stephen C. Walker: Maybe there's new things we're learning that they would like that they never got from Yahoo, but we could do. So yes, you always invest something in terms of building capabilities for any large partnership. But it's all part of, like Adam said, our core business. Like Adam said, we're learning from these advertisers things that they want.

From Yahoo. Previously, maybe there is new things, we're learning that week that they would like that they never got from Yahoo, but we could do so yes, you always invest something in terms of building capabilities for any large partnership, but it's all part of kind of our core business like as Adam said, we're learning from these advertisers things that they.

Justin Tyler Patterson: We're investing in it. That will impact and positively impact all of our businesses, not just that partnership. So while there's an investment, it's basically just a way to advance your business.

<unk>, we're investing in it that will impact positively impact all of our business not just that partnership. So while there is investment if basically just a way to advance your business and that's true of all of these partnerships that we're signing.

Adam Singolda: And it's true of all these partnerships that we're signing. Got it. Thank you both. And for what it's worth, Adam, you still brought the thunder there. Thank you, thank you, sir. I appreciate that. I mean, we'll still get a review after this, but thank you. Thank you. And this does conclude today's conference call. You may all disconnect.

Got it thank you Paul and for what it's worth Adam you still brought the Thunder there. Thanks.

Thank you. Thank you Sir I appreciate that I mean, given we still get a review after this but thank you.

Yes.

Thank you.

And this does conclude today's conference call you may all disconnect.

Okay.

Okay.

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