Q1 2024 Taboola.com Ltd Earnings Call

Operator: Hello and welcome. We'll be beginning in one minute. Good day, and thank you for standing by.

Hello, and welcome will be beginning in one minute.

Operator: Welcome to the Taboola First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jessica Kourakos, please.

Good day, and thank you for standing by.

Welcome to the taboo off first quarter 'twenty 'twenty four earnings conference call.

At this time, all participants are in listen only mode.

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

Ask a question during this session you will need to press star one on your telephone.

We will then hear an automated message advising your hand is raised to.

To withdraw your question. Please press star one again please.

Please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to Jessica Caracas. Please go ahead.

Jessica Kourakos: Thank you, and good morning everyone, and welcome to Taboola's first quarter 2024 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.

Jessica Kourakos: Thank you and good morning, everyone and welcome to divorce first quarter 2024 earnings conference call I'm here with Adam.

Jessica Kourakos: <unk> founder and CEO and Steve Walker <unk> CFO.

Jessica Kourakos: The company issued earnings materials today before the market and they are available in 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 uncertainties described in our SEC filings. These statements are based on.

Jessica Kourakos: 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. These 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.

Jessica Kourakos: Currently available information and we undertake no duty to update them, except as required by law.

Jessica Kourakos: Today's discussion is also subject to the forward looking statement limitations in the earnings press release.

Jessica Kourakos: Events could differ materially adversely from those anticipated during this call. We will use terms defined in the earnings release and refer to non-GAAP financial measures.

Jessica Kourakos: 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.

Jessica Kourakos: The reconciliations to GAAP. Please approach the non-GAAP tables in the earnings release posted on our website with that I'll turn the call over to Adam.

Adam Singolda: Thanks, Jessica. Good morning, everyone, and thank you all for joining us. We had a strong start with Q1 results above the high end of our guidance range across all metrics. XTAC of $139 million grew 20% versus last year. Adjusted EBITDA of $23 million grew more than 100%. Free cash flow was nearly $27 million in Q1, and it also more than doubled last year.

Jessica Kourakos: Yeah.

Adam: Thanks, Jessica good morning, everyone and thank you all for joining US we had a strong start with Q1 results above the high end of our guidance range across all metrics.

Adam: <unk> of $139 million grew 20% versus last year adjusted EBITDA of $23 million grew more than 100% free cash flow was only $27 million in Q1 and also more than doubled last year all metrics beat the high end of our guidance range and are on track to meet our full year 'twenty 'twenty.

Adam Singolda: All metrics beat the high end of our guidance range and are on track to meet our full year 2024 guidance. I'm also encouraged to see that our growth rates are accelerating compared to last year. Looking at our use of cash, over 100% of free cash flow in Q1 was spent on share buybacks, demonstrating our strong commitment to shareholder returns and confidence in our long-term strategy and ability to execute.

Adam: For our guidance.

Adam: I'm also encouraged to see that our growth rates are accelerating compared to last year looking at our use of cash over 100% of free cash flow. In Q1 were spent on share buybacks, demonstrating a strong commitment to shareholder returns and confidence in our long term strategy and ability to execute.

Adam Singolda: With a strong Q1 and Q2 guidance showing double-digit growth versus the same time last year, we are reiterating our 2024 guidance, which projects accelerated growth on every metric and makes 2024 a record year for us, with revenue growing 33% to nearly $2 billion. XTAC growing 25% to almost $670 million. Adjusted EBITDA of over $200 million, growing approximately 2x in 2023. And over $100 million of free cash flow, which is also 2x 2023 levels.

Adam: With a strong Q1, and Q2 guidance showing double digit growth versus the same time last year, we are reiterating our 2024 guidance, which projects accelerated growth on every metric and making 2020 for a record year for us.

Adam: Revenue growing 33% to nearly $2 billion.

Adam: Stock rose, 25% to almost $670 million.

Adam: Adjusted EBITDA of over 200 million, drawing approximately two X 2023, and over $100 million of free cash flow, which is also two X 2023 levels.

Adam Singolda: When looking at our core business, our main focus is first, making our advertisers successful and, in return, growing our yield year over year. And the second, and a big focus for us this year, is ramping up Yahoo! Starting with our initiatives driving advertising success, I can tell you I've just come back from an off-site where a lot of what we talked about was our goal to expand our initiatives to make Taboola a company recognized for quality across all fronts, delivering premium experiences to users and publishers while attracting tier one performance advertising.

Adam: When looking at our core business. Our main focus is first making our advertisers successful and in return growing our yield year over year and the second and the big focus for US This year is ramping Yahoo.

Adam: Charting with our initiatives driving advertisers' success I can tell you just come back from an upside where a lot of what we've talked about is our goal to expand our initiatives collectable like company recognized for quality across all fronts, delivering premium experiences to users and publishers, while attracting tier one performance advertisers.

Adam Singolda: As I wrote in my shareholder letter, I'm happy to report that we just crossed the 20% mark of our revenue being driven by top brands and agencies, and it's growing fast. We think there's a big upside here in many ways, more than I've imagined in the past. You will hear me speak a lot about it this year and onwards as I think this can be material to our partners as well as for us, driving yields even faster. Let me share a bit more about that.

Adam: As I wrote in my shareholder letter I am happy to report that we just crossed the 20% Mark of our revenue being driven by top brands and agencies and it's growing fast.

Adam: We think there's a big upside here in many ways more than I'd imagined in the past you'll hear me speak a lot about it this year and onwards as I think this can be material to our partners as well as for us driving yields even faster.

Adam Singolda: We have recently launched Taboola Select as a way for premium performance advertisers to reach our top 15% of publishers, which includes Yahoo, Apple, NBC, Disney, and more, with a premium standalone ad experience. Big brands are willing to pay a premium for it while focused exclusively on performance. This is not a branding play.

Adam: Let me share a bit more about this we have recently launched <unk> select as a way for premium performance advertisers to reach our top 15% of publishers, which includes Yahoo, Apple NBC Disney and more with a premium Standalone AD experience big brands are willing to pay a premium for it when a focused exclusively.

Adam: Our performance. This is not a branding play we're not looking for top of the funnel budgets here, but to enable big performance budgets to go beyond social and search to the open web and tabular new offering.

Adam Singolda: We're not looking for top-of-the-funnel budgets here, but to enable big performance budgets to go beyond social and search to the open web and Taboola's new offerings. Between Taboola Select, our YOW partnership, our Apple partnership, and the success of Tier 1 advertisers such as Hulu, Citi, and Verizon, we hope to differentiate ourselves in the marketplace and help drive yields even faster. Our biggest R&D and product investment is making advertisers successful. I'm happy to share that Maximus Conversion's adoption continues to grow and is now almost 60% of our revenue. We're focused on improving our retention rates and increasing budgets, also known as NDR.

Adam: Between diverse select our Yao partnership our Apple partnership and the success of tier one advertisers such as Hulu City, Verizon, we hope to differentiate ourselves in the marketplace and helped drive the yield even faster.

Adam: Okay.

Adam: Our biggest R&D and product investment is making advertisers successful I'm happy to share that <unk> conversions adoption continues to grow and is now almost 60% of our revenue we're focused on improving our retention rates and increased budgets also known as MTR.

Adam Singolda: We're seeing encouraging results from advertisers migrating to max conversion in AI, including double-digit growth in NDR for advertisers who have migrated to max conversion versus ones who have not. On improving retention rates, our main work here is to reduce cold starts by training our AI models and taking advantage of the massive amount of first-party data and click stream to look for similar past advertisers and bring that know-how front and center.

Adam: The encouraging results from advertisers migrating to Mexican version NII, including double digit growth in MTR for advertisers, who has migrated to Mexican version versus ones who is not.

Adam: And improving retention rates. Our main work here is to reduce call start by training, our AI models and taking advantage of the massive amount of first party data and click stream to look for similar past advertisers and bring that Knowhow front and center.

Adam Singolda: Switching gears to our second top priority this year, ramping Yahoo. We're on track to complete the migration by mid-year, as planned, and we continue to make progress, migrating Yahoo's tier one omnichannel advertisers to Taboola, and we've achieved our goal in Q1 to exceed $100 million in revenue on Yahoo supply. While there's still a lot of work to be done, we couldn't be more pleased with the partnership with Yahoo, the work between our leadership teams, and the encouraging performance advertisers are seeing when using Taboola's technology.

Adam: Switching gears to our second top priority this year ramping Yahoo. We're on track to complete the migration by midyear as planned and we continue to make progress migrating yahoos tier one omnichannel advertisers treatable and we've achieved our goal in Q1 to exceed $100 million in revenue on Yahoo <unk>.

Adam: While there is still a lot of work to be done we couldnt be more pleased with our partnership with Yahoo. The work between our leaderships and encouraging performance advertisers are seeing when using <unk> technology. One was a success story was with one of the worlds largest personal finance software companies was the outperformance was soft.

Adam Singolda: One recent success story was with one of the world's largest personal finance software companies, where the ad performance was so strong that they increased their budget more than 2x over the course of the campaign and are now one of the largest advertisers on the Taboola network. If there was ever proof that AI matters, this is a good example of it.

Adam: Strong did they increase their budgets more than two X over the course of the campaign and are now one of the largest advertisers under tabbouleh network. If there was ever a proof that AI matters. This is a good example of it.

Adam Singolda: We spoke last quarter about our relationship with Apple, and I'm happy to share that it has now expanded to new markets. Previously, Apple selected us to monetize Apple News and Apple Stocks as an authorized reseller, starting in Australia and Canada. And just recently, we expanded our role to serve as an authorized reseller for Apple News and Apple Stocks in the U.S. and U.K. markets. I could not be more proud of the Taboola team supporting our efforts here, and we have a lot to learn as we are on board with this amazing new partnership. And I remain confident that Apple will become one of our most important partners.

Adam: We spoke last quarter about our relationship with Apple and I'm happy to share that it has now expanded to new markets previously Apple that selected us to monetize Apple news and Apple stocks as an authorized reseller, starting in Australia, and Canada and just recently, we expanded our role to serve as an authorized reseller.

Adam: For Apple news and Apple stocks in the U S and U K markets.

Adam: I could not be more proud of the tableau team supporting our efforts here and we have a lot to learn as we onboard is amazing new partnership and I remain confident that Apple will become one of our most important partners.

Adam Singolda: Turning now to our gross engines, Taboola News, e-commerce, and our bidder. Overall, product innovation and commercial wins continue to drive our momentum here. Our key investment for Taboola News is getting more vertical videos and real-time content onto it, similar to what you're seeing on Instagram or Snap, and we're seeing great user engagement. In addition, we're introducing various utilities users may like to engage with, such as weather, gaming, and more.

Adam: Turning now to our growth engines to belong to use e-commerce, and a better overall product innovation and commercial wins continued to drive our momentum here.

Adam: Our key investments for Timberland news is getting a more vertical videos real type content onto it similar to what youre seeing on Instagram or snap and we're seeing great user engagement. In addition, we're introducing various utilities users may like to engage with such as weather gaming and more and our ambition here is to own.

Adam Singolda: And our ambition here is to, over the next many, many years, have people spend over 20 minutes a day with us, or as my product team likes to refer to it, we have a chance. On the e-commerce front, we had a great quarter, growing solid double digits and exceeding our expectations again. We launched AP's new e-commerce site, powered by Taboola, and it's beautiful. You should check it out.

Adam: The next many many years to have people spend over 20 minutes a day with us or is my product team likes to refer to it we have a chance to become the main dish.

Adam: E Commerce front, we had a great quarter growing solid double digits and exceeding our expectations again, we launched associated press, new ecommerce site powered by Tabbouleh and it's beautiful you should check it out it's called AP by line. It gives people a chance to check product reviews, and make decisions that matter to them leveraging the trust of AP.

Adam Singolda: It's called AP Byline. It gives people a chance to check product reviews and make decisions that matter to them, leveraging the trust of AP and our relationships with retailers. We also recently integrated with Amazon's DSP to allow Amazon sellers to extend their budgets into Taboola. For example, let's say you have a store on Amazon and you want to reach buyers on the open web.

Adam: And our relationships with retailers.

Adam: We also recently integrated with Amazon's DSP to without Amazon sellers to extend their budgets into tableau. As an example, let's say you have a store on Amazon and you want to reach buyers in the open web you can now extend your reach using Amazon's DSP on the tubular open web network of publishers.

Adam Singolda: You can now extend your reach using Amazon's DSP on the Taboola open web network of publishers. Our header bidder is still small, but the potential here, over time, is to integrate across our thousands of publishers, including Yahoo, into their display stack, which is an opportunity that can be quite meaningful. We are extremely excited by the prospect of our Taboola growth engines and their ability to create synergies with our core business over the long term.

Adam: Our header bidder is still small, but the potential here over time is to integrate across our thousands of publishers, including Yahoo entered our display stack, which is an opportunity that can be quite meaningful.

Adam: We are extremely excited by the prospect of our tubular gross and James and their ability to create synergies with our core business over the long term.

Adam Singolda: In summary, we're coming in strong into 2024, extending our high-end of guidance across all metrics, expecting double-digit growth in Q2 over last year, while reiterating our 2024 guidance, making this year a record year for us. Our revenue growth is accelerating while having a strong EBITDA of over $200 million and over $100 million of free cash flow. We're continuing our $100 million buyback authorization, and we're laser-focused this year on advertiser success, which should result in yield growth and ramping up Yahoo! With that, let me pass the call to Steve to review our financials and outlook in more detail.

Adam: In summary, we are coming in strong into 2024, extending our high end of guidance across all metrics expecting double digit growth in Q2 over last year, while reiterating our 2024 guidance, making this year a record year for us.

Adam: Our revenue growth is accelerating while having a strong EBITDA of over $200 million and over $100 million of free cash flow, we're continuing our $100 million of buyback authorization and we're laser focused this year on advertisers' success, which should result in the <unk> growth and ramping up Yahoo.

Adam: With that let me pass the call to Steve to review, our financials and outlook in more detail.

Stephen C. Walker: Thanks, Adam, and good morning, everyone. As Adam mentioned, we had a strong start to 2024. Our Q1 revenues were approximately $414 million and grew 26% year-over-year, accelerating from Q4 levels. XTAC gross profit was $139 million, which represented growth of 20% year-over-year. XTAC growth was driven by double-digit growth in advertising spend as we onboarded Yahoo! advertisers and saw the benefit of having Yahoo! supply available through our platform as well as by accelerating growth in our e-commerce business.

Stephen C. Walker: Thanks, Adam and good morning, everyone as Adam mentioned, we had a strong start to 2024, our Q1 revenues were approximately $414 million and grew 26% year over year accelerating from Q4 levels ex Tac gross profit was $139 million, which represented growth of 20.

Stephen C. Walker: 3% year over year.

Stephen C. Walker: Ex Tac growth was driven by double digit growth in advertising spend as we on boarded Yahoo advertisers and solve the benefit of having Yahoo supply available through our platform as well as by accelerating growth in our E Commerce business.

Stephen C. Walker: In addition, we saw double-digit growth in our premium brand and advertising demand spend, which included strong organic growth as well as the transitioning of advertising spend from Yahoo's platform to Taboola. Finally, one note on our financials that is new this quarter. On each of our financial statements in our 10-Q, you will note related party call-outs. For instance, on our income statement, you will see that we call out related party revenue and traffic acquisition costs. As you might guess, those related party numbers are for Yahoo. The traffic acquisition cost disclosure is relatively simple.

Stephen C. Walker: In addition, we saw double digit growth in our premium brand and advertising demand spend which included strong organic growth as well as the transitioning of advertising spend from Yahoo, as a platform to tube boiler.

Stephen C. Walker: One note on our financials that is new this quarter on each of our financial statements in our 10-Q Youll note related party callouts.

Stephen C. Walker: For instance on our income statement, you will see that we call out related party revenue and traffic acquisition cost as you might guess those related party numbers are for Yahoo.

Stephen C. Walker: The traffic acquisition cost disclosure is relatively simple. This is the revenue share we pay to Yahoo, and it flows through to payables on the balance sheet and change of payables in the cash flow statement.

Stephen C. Walker: This is the revenue share we pay to Yahoo, and it flows through to payables on the balance sheet and change of payables in the cash flow statement. The related party revenue is not quite as simple to understand. There are three types of advertisers spending on Yahoo's supply. First, there are what we have historically called omni-channel advertisers.

Stephen C. Walker: The related party revenue is not quite as simple to understand there are three types of advertisers spending on Yahoo supply first there are what we have historically called Omnichannel advertisers. These are advertisers that by multiple advertising formats through the Yahoo, DSP display video and native.

Stephen C. Walker: These are advertisers that buy multiple advertising formats through the Yahoo DSP, display, video, and native. They are still billed and collected by Yahoo, but all of the native revenue is spent on the Taboola platform, so it is recognized by Taboola as revenue and appears as related party revenue. The second type of advertiser is an advertiser that historically was only spending on native through Yahoo; no display, video, or other formats, and has now been transitioned to Taboola.

Stephen C. Walker: These advertisers do not appear in related party revenue because they are now billed and collected directly by Taboola, so they are not the customer of a related party. The last type of advertiser is an advertiser that has not historically spent through the Yahoo platform but is now spending on Yahoo supply through the Taboola platform. These are either historical Taboola customers or new customers that we've brought on.

Stephen C. Walker: They also do not appear in related party revenue since they are billed and collected by Taboola. However, I will note that there is a small amount of other revenue in the related party disclosure that is either from other related parties, companies related to Yahoo, or other advertisers that spend through Yahoo on Taboola but not through the DSP. However, this is a very small part of the related party revenue. I will also note that related party revenue also flows through to the balance sheet in the receivables line and into the cash flow statement in the change in receivables. I hope that helps explain what is in the related party disclosure. Now, let me get back to our regularly scheduled program.

Stephen C. Walker: They are still billed and collected by Yahoo, but all of the native revenue is spent on the tabbouleh platform. So they are recognized by <unk> revenue and appear as a related party revenue.

Stephen C. Walker: The second type of advertiser as an advertiser that historically was only spending on native through Yahoo. No display video or other formats and has now been transitioned to tabbouleh. These.

Stephen C. Walker: These advertisers do not appear in related party revenue because they are now billed and collected directly by tabbouleh. So they are not the customer of a related party.

Stephen C. Walker: The last type of Advertiser is an advertiser that had not historically spent through the Yahoo platform, but is now spending on Yahoo supply through the tabbouleh platform. These are historical to bullet customers or new customers that we have brought on they also do not appear in related party revenue since they are billed and collected by <unk>.

Stephen C. Walker: Sure.

Stephen C. Walker: I will note that there is a small amount of other revenue and the related party disclosure that is either from other related parties companies related to Yahoo, or other advertisers that spend through yahoo onto bouloute, but not through the DSP. However, these are a very small part of the related party revenue.

Stephen C. Walker: I will also note that the related party revenue also flows through to the balance sheet in the receivables line and into the cash flow statement and the change of receivables I hope that help explains what is in the related party disclosures.

Stephen C. Walker: Now, let me get back to our regularly scheduled programming in Q1, our net loss was $26 $2 million and our non-GAAP net income was positive $3 $8 million adjusted EBITDA was $23 $5 million, representing a 17% adjusted EBITDA margin.

Stephen C. Walker: In Q1, our net loss was $26.2 million, and our non-GAAP net income was positive $3.8 million. Adjusted EBITDA was $23.5 million, representing a 17% adjusted EBITDA margin. Year over year, Adjusted EBITDA was down, which was due primarily to higher expenses related to the onboarding of Yahoo's supply that were not in the year-ago period and which preceded the full benefit of the Yahoo advertiser

Stephen C. Walker: 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, and which preceded the full benefit of Yahoo Advertiser transitions.

Stephen C. Walker: Free cash flow benefited from the stronger-than-forecasted Adjusti-Vida, partially offset by the expenses related to the onboarding of Yahoo. We are very happy that our teams drove accelerating revenue and XTAC performance in Q1. Through the remainder of the year, we expect improving cost efficiency, especially as revenue from Yahoo! advertiser transitions catches up with the associated costs, which will drive margin. Operating expenses were $127 million in Q1, up $9 million year-over-year as a result of the costs incurred to onboard the significant inventory we are gaining with the addition of Yahoo!

Stephen C. Walker: Free cash flow benefited from the strong stronger than forecasted adjusted EBITDA, partially offset by the expenses related to the Onboarding of Yahoo. We.

Stephen C. Walker: We are very happy that our teams drove accelerating revenue ex Tac performance in Q1 through the remainder of the year, we expect improving cost efficiency, especially as the revenue from Yahoo Advertiser transitions catch up with the associated costs, which will drive margin expansion.

Stephen C. Walker: Operating expenses were $127 million in Q1 up $9 million year over year as a result of the costs incurred to onboard the significant inventory. We are gaining with the addition of Yahoo. We continue to focus on cost discipline. Despite the hiring are required to support Onboarding Yahoo, Our head count.

Stephen C. Walker: We will continue to focus on cost discipline. Despite the hiring required to support onboarding Yahoo!, our headcount is still roughly flat relative to its peak in July of 2022. With this ongoing expense discipline and our strong growth expectations, we continue to expect that in 2024, we will approach our long-term Adjust-IV-ADOM margin target of 30 percent. Gap net loss for Q1 of $26.2 million included amortization of intangibles of $15.9 million, share-based compensation expenses of $13.8 million, and holdback compensation expenses related to the Connexity acquisition of $2.6 million, all of which were excluded from non-gap net income.

Stephen C. Walker: It's still roughly flat relative to its peak in July of 2022.

Stephen C. Walker: This ongoing expense discipline and our strong growth expectations. We continue to expect that in 2024, we will approach our long term adjusted EBITDA margin target of 30%.

Stephen C. Walker: GAAP net loss for Q1 of $26 $2 million included amortization of intangibles of $15 9 million share based compensation expenses of $13 $8 million and hold back compensation expenses related to the connects to the acquisition of $2 $6 million.

Stephen C. Walker: All of which were excluded from non-GAAP net income.

Stephen C. Walker: Our non-GAAP net income of $3.8 million was above the high end of our guidance. In terms of cash generation, we had approximately $32.4 million in operating cash flow in Q1 and free cash flow of $26.8 million. This includes net publisher prepayments, which were a source of cash of $7.3 million, and interest payments on our long-term debt, which were a use of cash of $3.6 million. As I have highlighted in previous quarters, I would note that net publisher prepayments were a source of cash this quarter due to the fact that new prepayments were lower than the amortization of historical prepayments.

Stephen C. Walker: Our non-GAAP net income of $3 $8 million was above the high end of our guidance range.

Stephen C. Walker: In terms of cash generation, we had approximately $32 4 million in operating cash flow in Q1, and free cash flow of $26 8 million. This includes net publisher prepayments, which were a source of cash of $7 3 million and interest payments on our long.

Stephen C. Walker: Term debt, which were a use of cash of $3 6 million.

Stephen C. Walker: As I have highlighted in previous quarters I would note that net publisher prepayments were a source of cash this quarter due to the fact that new prepayments were lower than the amortization of historical prepayments.

Stephen C. Walker: Let's turn to the balance sheet. You can see that our net cash balance remains healthy. Our net cash position of $35.5 million remained positive at the end of Q1, even after share repurchase. Cash and cash equivalents, plus our short-term investments, were $181 million at the end of Q1. Cash and cash equivalents and short-term investments remained above our long-term loan balance of $145.5 million.

Stephen C. Walker: Let's turn to the balance sheet, you can see that our net cash balance remains healthy our net cash position of $35 $5 million remain positive at the end of Q1, even after share repurchases.

Stephen C. Walker: Cash and cash equivalents, plus our short term investments were $181 million at the end of Q1 cash and cash equivalents and short term investments remained above our long term loan balance of $145 $5 million.

Stephen C. Walker: Speaking of our share repurchases, we repurchased $28 million of shares in Q1. We still have $92 million of authorizations under our previously announced $100 million expansion of our share repurchase program. When we initiated our buyback program, we stated that our intent was to at least offset any dilution and maintain our issued and outstanding shares at the end of Q1 2023 level. You can see that we have exceeded that goal, as our issued and outstanding shares at the end of Q1 2024 were lower than the end of Q1 2023 by almost 5 million shares.

Stephen C. Walker: Speaking of our share repurchases, we repurchased $28 million of shares in Q1, we still have $92 million of authorizations under our previously announced $100 million expansion of our repurchase plan.

Stephen C. Walker: When we initiated our buyback program, we stated that our intent was to at least offset any dilution and maintain our issued and outstanding shares at end of Q1 2023 levels.

Stephen C. Walker: You can see that we have exceeded that goal as our issued and outstanding shares at the end of Q1 2024 were lower than the end of Q1 2023 by almost 5 million shares.

Stephen C. Walker: In terms of future use of cash, we continue to be able to fund our organic growth investments from our operating cash flow. As we said last quarter, we believe that at current valuations, the best use of our free cash flow is the buyback share. To the extent that we have additional cash to deploy, we will consider paying down our long-term debt. However, as always, both share repurchases and early retirement of debt are contingent upon the availability of sufficient working capital.

Stephen C. Walker: In terms of future use of cash we continue to be able to fund our organic growth investments from our operating cash flow as we said last quarter. We believe that at current valuations. The best use of our free cash flow is to buy back shares to the extent that we have additional cash to deploy we will consider.

Stephen C. Walker: We're paying down our long term debt.

Stephen C. Walker: As always both share repurchases and early retirement of debt are contingent upon the availability of sufficient working capital I'm also happy to report that the process in Israel for share repurchases has been updated for Israeli companies like Tabbouleh with securities listed outside Israel.

Stephen C. Walker: I'm also happy to report that the process in Israel for share repurchases has been updated for Israeli companies like Taboola, with securities listed outside Israel. Under the new process, we must post a notice on our website that we intend to buy back shares, and if no creditors object within 30 days, we can begin the buyback. The process still requires our board to conclude that we meet a financial strength test as specified in the rules.

Stephen C. Walker: Under the new process, we must posted a notice on our website that we intend to buy back shares and if no creditors object within 30 days, we can begin the buybacks. The process still requires our board to conclude that we meet our financial strength test asbestos fight in the rules. So going forward you may see us post notices of our intention to.

Stephen C. Walker: So, going forward, you may see us post notices of our intention to buy back shares to our investor base. Now, let me shift to our forward-looking guidance. Two important expectations are included in this guidance.

Stephen C. Walker: Buy back shares to our Investor page.

Stephen C. Walker: First, while there is significant work left to be done, we expect the Yahoo advertiser migration to be complete by the middle of this year, and we will continue ramping Yahoo into 2025. Second, we expect yield growth to turn positive in 2024 as the volume of our contextual data increases with the addition of Yahoo and other supply to our network, and our investments in performance advertising bear fruit. As I mentioned, we are very happy with the strong start to 2024, and we are reiterating our guidance for 2024.

Stephen C. Walker: Now, let me shift to our forward looking guidance two important expectations are included in this guidance first while there is significant work left to be done we expect the Yahoo Advertiser migration to be complete by the middle of this year and we will continue ramping Yahoo into 2025.

Stephen C. Walker: Second we expect yield growth to turn positive in 2024 as the volume of our contextual data increases with the addition of Yahoo, and other supply to our network and our investments in performance advertising bear fruit.

Stephen C. Walker: As I mentioned, we are very happy with the strong start to 2024, and we are reiterating our guidance for 2024.

Stephen C. Walker: This guidance implies strong top-line 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 to $679 million. That X-TAC is up roughly 25% year-over-year at the mid- 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 and free cash flow guidance represents roughly a doubling of both metrics versus 2023.

Stephen C. Walker: This guidance implies strong topline growth and improving profitability, we expect revenue of $1 $89 billion to $194 billion.

Stephen C. Walker: Which represents growth of 33% at the midpoint, we expect gross profit of $535 million to $555 million and ex Tac gross profit of $656 million to $679 million that ex Tac is up roughly 25% year over year at the mid.

Stephen C. Walker: We are reiterating.

Stephen C. Walker: Reiterating our 2024, adjusted EBITDA guidance of over $200 million and free cash flow expectation of over $100 million.

Stephen C. Walker: I will note that the adjusted EBITDA and free cash flow guidance represents roughly a doubling of both metrics versus 2023.

Stephen C. Walker: Finally, we are expecting non-GAAP net income of $84 to $104 million in 2024. We are also introducing Q2 2024 guidance. This quarter, we expect revenues of $410-$440 million, gross profit of $110-$120 million, XTAC gross profit of $140-$150 million, adjusted EBITDA of $20-$30 million, and non-GAAP net income of $0-10 million.

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

Stephen C. Walker: We are also introducing Q2 2024 guidance. This quarter, we expect revenues of $410 million to $440 million gross profit of $110 million to $120 million.

Stephen C. Walker: <unk> gross profit of $140 million to $150 million.

Stephen C. Walker: <unk> EBITDA of $20 million to $30 million and non-GAAP net income of zero to positive $10 million.

Stephen C. Walker: Let me finish by saying that we are very happy with our first quarter performance. Our growth is accelerating in 2024. And I'm looking forward to the step change we are expecting in our financials in 2024. The growth investments we have made in 2023, the additional scale that Yahoo is bringing, and the additional supply we will be onboarding as part of a new partnership with Apple are accelerating our journey towards becoming a must-buy for advertisers looking to reach consumers on the open web. And with that, I will pass it back to Adam for some closing remarks. Thanks.

Speaker Change: Let me finish by saying that we are very happy with our first quarter performance. Our growth is accelerating in 2024 and I'm looking forward to the step change we are expecting in our financials in 2024 the growth investments. We have made in 2023, the additional scale that Yahoo is bringing and the additional supply.

Stephen C. Walker: <unk>, we will be onboarding as part of a new partnership with Apple is accelerating our journey towards becoming a must buy for advertisers looking to reach consumers in the open web.

Stephen C. Walker: And with that let me pass it back to Adam for some closing remarks.

Adam Singolda: Thanks Steve. In summary, it's great to see our business momentum and growth rates accelerating. It's an exciting time for us here at Taboola, seeing our investments pan out. Starting with our financials, we started 2024 strong with a beat above our high end of guidance across all metrics. Our growth rates are accelerating, which is good to see.

Adam Singolda: Thanks, Steve in summary, it's great to see our business momentum and growth rates accelerating its an exciting time for us here at <unk> seen our investments panning out starting with our financials. We started 2024 strong with a beat above our high end of guidance across all metrics our growth rates are accelerating which is good to see.

Adam Singolda: In Q2, we're guiding for double-digit growth versus Q2 of last year, and 2024 is a record year for us overall, with nearly $2 billion in revenue, north of $20 million in EBITDA, and over $100 million of free cash flow. We are executing on our buyback program, which demonstrates our confidence in our ability to execute and create shareholder value. When looking at our business, our top two priorities this year are making advertising successful and growing Yahoo.

Adam Singolda: In Q2, we are guiding for double digit growth versus Q2 of last year and 2024 is a record year for us overall with nearly $2 billion in revenue north of $200 million of EBITDA and over $100 million of free cash flow.

Adam Singolda: We're executing on our buyback program, which demonstrates our confidence in our ability to execute and create shareholder value when looking at our business. Our top two priorities. This year are making advertisers successful in ramping Yahoo.

Adam Singolda: On advertiser success, Max Conversion is a hit with advertisers. After six months, it has almost 60% adoption, and advertisers who have adopted it are generating double-digit higher NDR. We're also focusing on attracting premium advertisers with Taboola Select, accessing our top 15% of our network, including Yahoo, Disney, Apple, NBC, and others. On Yahoo, we're on track to complete the migration by mid-year as planned, and we crossed the $100 million mark in Q1 as we thought. Beyond that, we're seeing great momentum overall. Our relationship with Apple is now expanding to the U.S. and U.K., beyond Canada and Australia.

Adam Singolda: On Advertisers' success Mexican version is a hit with advertisers after six months, it's almost 60% adoption and advertisers who have adopted our generating double digit higher MBR.

Adam Singolda: Also focusing on attracting premium advertisers, which are both select accessing our top 15% of our network, including Yahoo, Disney Apple NBC and others.

Adam Singolda: We're on track to complete the migration by midyear as planned and we crossed the $100 million in Q1 as we thought.

Adam Singolda: Beyond that we're seeing great momentum overall, our relationship with Apple is now expanding to the U S and UK beyond Canada, and Australia, our growth engines e-commerce to pull our newest and header bidding are showing strong momentum and becoming more and more synergetic to our core business, making our publisher and advertiser business strong.

Adam Singolda: Our growth engines, e-commerce, Taboola News, and head of bidding, are showing strong momentum and becoming more and more synergetic to our core business, making our publisher and advertiser business stronger. I'm excited to be exactly where we are. We know what we need to do. We have an incredible team all around the world working hard to build the very first must-buy advertising company for the open web. Thank you all for being part of our journey. And with that, let's open it up to questions. Operator? Thank you.

Adam Singolda: <unk>.

Adam Singolda: Im excited to be exactly where we are we know what we need to do we have an incredible team all around the world working hard to build the very first must buy advertising company for the open web. Thank you all for being part of our journey and with that let's open it up for questions operator.

Operator: At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Laura Martin of Needham. Your line is now open.

Speaker Change: Thank you.

Speaker Change: At this time, we will conduct a question and answers session. As a reminder to ask a question you will need a press star one on your telephone.

Operator: And wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Please standby as we compile the Q&A roster.

Operator: Yes.

Operator: Okay.

Operator: Our first question comes from the line of Laura Martin of Needham. Your line is now open.

Laura Anne Martin: Good morning. Boy, there's a lot going on in great numbers for you guys.

Laura Anne Martin: Good morning Boy, there's a lot going on in great numbers, you guys congratulation.

Adam Singolda: Congratulations. Thank you. Thank you, Laura.

Adam Singolda: Thank you thank you Laura.

Laura Anne Martin: So my first question is about these priorities. I know that you're trying to onboard these omni-channel advertisers at Yahoo, but there's a lot that you're talking about in the shareholder letter about performance, high-quality performance advertisers. So is this just an overall part of a strategy to just increase the total number of advertisers? I'm surprised that Yahoo's priority isn't number one and that you've elevated this performance, high-quality performance advertisers to be a higher priority than Yahoo. Can you speak to that, please?

Laura Anne Martin: So my first question is on these priorities. So I know that you're trying to onboard these omnichannel advertisers at Yahoo, but theres a lot that you're talking about in the shareholder letter about performance high quality performance advertisers.

Laura Anne Martin: It's just an overall part of our strategy to increase the total number of advertisers I'm surprised at the Yahoo priority is at number one in that you've elevated this performance high quality performance advertisers to be a higher priority than Yahoo can you speak to that please.

Adam Singolda: Yeah, sure. Hi Lauren.

Speaker Change: Yes, sure Hi, Lorraine and looking forward to seeing you out very soon the event. So so overall with Yahoo. One thing that we're seeing in and I mentioned the letter also an interesting case study of the performance advertisers one of the largest.

Adam Singolda: I'm looking forward to seeing you very soon at the event. So, overall, with Yahoo!, one thing that we're seeing, and I mentioned the letter also, an interesting case study of a performance advertiser, one of the largest personal finance advertisers that was able to migrate and double the spend, one using Taboola technology. In general, we're seeing something that is fairly new to us, which is that we're premium advertisers that are great names, you know, Hulu, and Verizon, and Samsung, and names we've mentioned before are coming on board.

Adam Singolda: Personal finance advertiser that was able to migrate and double the spend when Susan the tableau technology in general were seeing something that is fairly new to us, which is where premium advertisers.

Adam Singolda: That's a great names in Oahu and Verizon at Samsung in their name as we've mentioned before are coming on board.

Adam Singolda: When they're seeing good performance, their ability to spend a lot more is quite exciting, and two, they're willing to pay a premium for doing so, which is also why we launched Taboola Select, which is a way to essentially create this index of the top of our company-wide network between Yahoo!, and Apple, and Disney, and NBC, and BBC, and others to allow advertisers to buy a specific kind of like segregated So, what we think is that there's an opportunity for us to grow our portion of the kind of top-tier performance brand advertiser, and again, this is not a top-of-the-funnel kind of attention play. This is by far a performance focus, using max conversion, pixel on page, and all the things we like.

Adam Singolda: When they are seeing good performance the ability to spend a lot more is is quite exciting and two theyre willing to pay a premium for doing so which is also why we launched <unk> select which is a way to essentially create like this index of the top of our company wide network between Yahoo, and Apple and Disney.

Adam Singolda: NBC in BBC and others too.

Adam Singolda: To allow advertisers to buy specific kind of like segregated AD unit, a standalone AD unit.

Adam Singolda: And pay a premium for it so what we think is that there is an opportunity for us to grow our portion of kind of top tier performance brand Advertiser and again. This is not a top of the funnel kind of attention play. This is by far our performance focus using minimax conversion pixel on page all the things we like however, coming from.

Adam Singolda: However, coming from agencies and brands, and a lot of it we've learned from the partnership with Yahoo, so that's why we're speaking a lot about it. That's why we launched Taboola Select.

Adam Singolda: Agencies and brands and a lot of it we've learned.

Adam Singolda: From the partnership with Yahoo. So that's why I was thinking a lot about it that's why we've launched it with a select.

Adam Singolda: And that's a lot of what excites me, because I think as Taboola grows from $2 to $3 to $4 billion in revenue, there's an opportunity to become much more kind of a show of wallet for brands and agencies, but performance-focused. I think it also is an opportunity to elevate our company's overall quality. So I like where it's going, and that's why we're talking about it.

Adam Singolda: And that's a lot of what excites me because I think as <unk> grows from two to $3 billion to $4 billion in revenue. There is an opportunity to become much more kind of share of wallet for brands and agencies, but performance focused.

Adam Singolda: I think it also is an opportunity to elevate our company overall quality, so I like where it's going and that's why we're thinking about it.

Adam Singolda: And to your question about why I think performance advertisers are actually the number one priority, and then, by far, actually, maybe even number two or three and four, is because I see such an opportunity to accelerate yields from where we are over the next many, many years. And if you think about that, if you can double the company's yields, you double the company's revenue. And I think we can double and triple Taboola by just growing yield.

Adam Singolda: And then to your question about why I think performance advertisers actually the number one priority.

Adam Singolda: And then by far actually maybe even number two or three and four is because I see such an opportunity to accelerate yields from where we are over the next many many years.

Adam Singolda: And if you think about that if you can double the company's EOG double the company's revenue and I think we can double and triple tubular by just brought on yield and that is by far the biggest thing we can do for our company and shareholders. So we have the biggest focus on that from the performance advertising Tech team our sales team, even our work with Yahoo. So I do think that.

Adam Singolda: And that is by far the biggest thing we can do for our company and shareholders. So we have the biggest focus on that from the performance advertising tech team, our sales team, and even our work with Yahoo. So I do think that for Taboola, over the next three or five years, yield expansion is by far the biggest thing we can do, and of course, in 2024, you know, Yahoo is the biggest thing we have going on.

Adam Singolda: First of all I know over the next three to five years here.

Adam Singolda: Yield expansion is by far the biggest thing we can do and of course in 2020 for Yahoo is the biggest thing we have going on.

Laura Anne Martin: Okay, very helpful Adam. And then secondly, I was intrigued that in a shareholder letter you set a goal of 30 minutes of engagement a day. Could you talk about where your engagement is today and what the core drivers of engagement growth are? How do you bridge the gap between what your engagement level is today in terms of minutes and like, what is it you're going to do? What are the tools to get to that 30 minutes of engagement?

Adam Singolda: [inaudible]

Speaker Change: Okay very helpful. Adam and then secondly, I was intrigued in the shareholder letter you set a goal of 30 minutes of engagement a day could you talk about where your engagement today and what's the.

Adam Singolda: But the core drivers of engagement growth or how do you bridge the gap between what your engagement level is today in terms of minutes and like what is it you're gonna do where the tool to get to that 30 minutes of engagement, which is your call yes.

Adam Singolda: Yeah, the biggest driver for that is Taboola News, as far as we can see today. So what happens is, more and more OEMs are integrating us into the what they call the lock screen or wake screen, which is even before the consumer kind of interacts with the device itself. And then I was joking earlier saying that my team is referring to it as the main dish because Taboola becomes the first thing they see before they even go to Facebook and Google or other apps.

Adam Singolda: We're the biggest driver for that is to build a news as far as we see today. So what happened is stable and use more and more Oems are integrating us should be in the what they call lock screen, our lakes going which is even before the consumer economy is interacting with the device itself and then I was joking on earlier, saying that my team is referring to that is the main.

Adam Singolda: So we've become the first thing consumers do, and the average consumer is looking at their lock screen over 100 times a day. Now what we see now is that, over the last quarter, and I mentioned that in my letter, we're introducing more and more vertical videos. Think of it like Reels or what Snap is doing.

Adam Singolda: Dish the Crystal ball it becomes the first thing they see before they even go to Facebook and Google or other apps. So we become the first in consumers do and the average consumer is looking at their lock screen over 100 times a day now what we see now is that over the last quarter and I mentioned that in my letter, we're introducing more and more.

Adam Singolda: Video is think of it like videos or like what snap is doing and that is expanding engagement with consumers and we're seeing acceleration in time and engagement and because of that our product roadmap. This year as more and more getting oriented around one video specifically full screen vertical video.

Adam Singolda: And that is expanding engagement with consumers, and we're seeing acceleration in time and engagement. And because of that, our product roadmap this year is more and more getting oriented around, one, videos, specifically full screen vertical videos, and two, utilities. As an example, we're now introducing consumers to weather. We're offering them games. We're offering them to see if you're Virgo. What does that mean?

Adam Singolda: And two utilities as an example, we're now introducing consumers to weather.

Adam Singolda: Offering them games, we're offering them to see.

Adam Singolda: So we're giving you more things that you might like. We're using AI to personalize different utilities you might like to engage with. And thanks to that, we're getting more time with consumers. So we didn't share Taboola News' current kind of time, but I can tell you it's in the single digits as of now, but growing. We have some cases when it's more than 10 minutes.

Adam Singolda: If you're a very go what does that mean and so we're giving you more things that you might like we're using AI to personalize different utilities, you might like to engage with.

Adam Singolda: And thanks to that we're getting more time with consumers. So we didnt charitable in this current kind of time, but I can tell you at tinder single digit as of now but growing.

Adam Singolda: We have some cases, when it's more than 10 minutes.

Adam Singolda: And I believe that over the next many, many years, my aspiration is to get this to be kind of consistently double-digit or 20 minutes a day. And you know, my philosophy is that if you take people's time, over time, you build a great business around it. So if you build something that consumers want, and they use it again and again and again, you know, the revenue follows. And that's why I really like Taboola News, because one, I think it helps Taboola become even more important to consumers.

Adam Singolda: And I believe that over the next many many years nice duration is to get this to be kind of consistently double digits or 20 minutes a day and you know my philosophy is that if you get People's time over time, you build a great business around it. So if you build something that consumers want and they use it again and again and again the revenue follows and Thats why I really like to build a news because.

Adam Singolda: I think it helps us to build that become even more important to consumers, but again its mega synergetic to our core because Daniel you click to go to a publisher site, it's stable as publishers and it allows us to become a growing source of traffic to publishers, and especially with <unk> and bar. The Gemini all those things I think it matters to publishers a lot.

Adam Singolda: But again, it's mega synergetic to our core because then you click to go to a publisher's site, it's Taboola's publisher, and it allows us to become a growing source of traffic for publishers. And especially with Gen AI and BAR, the Gemini, all those things, I think it matters to publishers a lot. Very helpful.

Adam Singolda: Very helpful. Thank you, Adam, very much.

Speaker Change: Very helpful. Thank you very much sir.

Operator: Please stand by for our next question. Our next question comes on the line from Matt Condon of Citizens JMP. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Stephen C. Walker: Yeah, so good question on the guidance. So in terms of our full-year guidance, you know, we're obviously happy that in Q1, we grew 26% year over year on a revenue basis and 20% year over year on a XTAC basis. So it was a very strong quarter for us, and we expect improved adjusted EBITDA margins as we move to the back half. So we're still expecting our full year adjusted EBITDA margins to be 30%, or at least to approach 30%.

Matt Condon: Our next question comes from the line of Matt Condone of citizens JMP. Your line is now open.

Speaker Change: Thank you for taking my questions. My first one is just after a strong beat in <unk> relative to your guidance you left the full year guidance unchanged is there something that's happening in the macro or otherwise to prevent you from raising your guidance and then my second question is just as Youre expanding your coverage of Apple news and Apple stock to the U S and U K can you just help.

Stephen C. Walker: Actualize the opportunity and how do you expect this to impact financials in 2024.

Speaker Change: Thank you so much.

Speaker Change: Yes. So good question on the guidance so in terms of our full year guidance.

Stephen C. Walker: We're we're obviously happy that Q1, we grew 26% year over year on a revenue basis, and 20% year over year, an ex Tac basis. So it was a very strong quarter for us.

Stephen C. Walker: And we expect improved adjusted EBITDA margins as we move to the back half. So we're still expecting our full year adjusted EBITDA margins to be 30% or at least to approach, 30%. So I think we're pretty happy with where we are 2024. In fact is going to be a record year for us it will be our highest ex Tac and highest.

Stephen C. Walker: So I think we're pretty happy with where we are. 2024, in fact, is going to be a record year for us. It'll be our highest XTAC and highest adjusted EBITDA on record. So overall, we think the guidance is really strong. We feel good about where we're at, but it's still very early. So while we feel very good about where we are, there's a lot of work to do. And we don't want to adjust the rest of the year yet, being as early as it is, in terms of Apple's opportunity. Yeah, you know, we don't like to speak about any specific accounts.

Stephen C. Walker: Adjusted EBITDA on record. So overall, we think the guidance is really strong we feel good about where we're at but it's still very early so while we feel very good about where we're at there's a lot of work to do and we don't want to adjust the rest of the year yet being as early as it is so we're very happy with where we stand.

Stephen C. Walker: We're just not ready to change the full year at this point.

Stephen C. Walker: In terms of Apple opportunity, yes, we don't like to speak about any specific accounts.

Adam Singolda: Yeah, you know, we don't like to speak about specific accounts for reasons you can imagine. But what I can tell you is, one, it's very exciting for us to work with a company like Apple in four markets. Obviously, the UK and the US are great markets to expand our relationship with. We do think that this drives two things for us as a company. Following also Laura's question, this is a very good anchor, kind of a step forward towards Taboola giving premium advertisers yet another way to reach consumers.

Adam Singolda: For reasons, you can imagine, but what I can tell you is one it's very exciting for us to work with the company like Apple.

Adam Singolda: Now in four markets.

Adam Singolda: As the U K and the U S are great markets to expand our relationship with we do think that this drives two things for us as a company one.

Adam Singolda: Following also Laura <unk> question. This is a very good anchor kind of our step forward towards tubular given premium advertisers yet another way to reach consumers. So theres no more premium than Apple and that's that's really awesome for us to have that relationship and offer that to brand quality.

Adam Singolda: So there's no more premium than Apple, and that's really awesome for us to have that relationship and offer that to brand quality advertisers that are looking for performance. So that's one. It fits perfectly well with our kind of elevating and getting even more access to top brands all around the world. And two, we do believe that Apple has a chance of becoming one of our largest partners. So I'm comfortable saying that without getting into specifics.

Adam Singolda: They are looking for performance. So that's why it fits perfectly well with our kind of elevating and getting even more access to top brands all around the world and two we do believe that Apple has a chance of becoming one of our largest partners, so I'm comfortable saying that without getting into specifics.

Adam Singolda: Yeah.

Speaker Change: Thank you so much that's helpful.

Speaker Change: Thank you.

Adam Singolda: Please standby for our next question.

Adam Singolda: Okay.

Operator: Please stand by for our next question. Our next question comes from the line of Zach Cummins of B Ryeway Securities. Your line is now open.

Adam Singolda: Our next question comes from the line of Zach Cummins of B Riley Securities. Your line is now open.

Zach Cummins: Hi, good morning. Thanks for taking my questions and congrats on the strong Q1 results. I really just had a follow-up question around kind of the assumptions that are baked into your Q2 guidance here and how we should think about the progression going into the second half of the year just based on the unchanged outlook. And then, part two, with the expanded Apple relationship, do you talk about additional work on the development side that's going to be required as you continue to onboard and ramp that relationship in the second half of this year?

Zach Cummins: Hey, good morning, Thanks for taking my question and congrats on the strong Q1 results.

Zach Cummins: I just had a follow up question around kind of the assumptions that are baked into your Q2 guidance here and how we should think about the progression going into the second half of the year just based on the unchanged outlook.

Zach Cummins: And then part two is just with the expanded Apple relationship can you talk about.

Zach Cummins: Can it be additional work on the development side thats going to be required as you continue to onboard and ramp that relationship in second half of this year.

Stephen C. Walker: Yeah, so what's the question about the Q2 guidance though specifically?

Speaker Change: Yes, so what's the what's the question about the Q2 guidance specifically.

Zach Cummins: Just key assumptions that are baked into that versus, I mean, the strong performance out of the gate here and kind of how we should think about the progression into the second half of the year to hit that full year guidance range that's reapproaching. Got it.

Speaker Change: Just Keith.

Zach Cummins: Baked into that.

Zach Cummins: The strong requirements out of the day here and kind of how we should think about the progression.

Zach Cummins: Second half of the year.

Zach Cummins: Full year guidance range of three firms.

Stephen C. Walker: Got it. So, I think in terms of the Q2 guidance and, frankly, the full year guidance, the most important assumptions that we're making there are, one, that Yahoo! is fully ramped by mid-year. So, there's still a lot of work to do, but we're making good progress. I think Adam alluded earlier to how we are seeing some really good results from some of the advertisers we brought across, but we have got to finish that work and get the rest of the advertisers across.

Speaker Change: Got it.

Stephen C. Walker: In terms of the Q2 guidance and frankly, the full year guidance. The most important assumptions that we're making there are one that the Yahoo is fully ramped by mid year. So there's still a lot of work to do there were but we're making good progress I think Adam alluded to earlier, how we are seeing some re.

Stephen C. Walker: Good results from some of the advertisers we brought across but we got to finish that work and get the rest of the advertisers across so that's that's assumption one is that that happens. We're also assuming that in the back half of the year, especially we start to see some yield gains as we basically.

Stephen C. Walker: So, that's assumption number one, is that that happens. We're also assuming that in the back half of the year, especially, we start to see some yield gains as we, basically, from those new advertisers that we're bringing across and from our own work on performance advertising, start to see benefit from that, and we start to gain some yield assumptions or some yield gains as a result. And then I think the other kind of basic assumption that we've made, which I think we talked about last quarter, is that operating expenses will kind of be running at roughly Q4 levels for the year.

Stephen C. Walker: From those new advertisers that we're bringing across and from our own work on performance advertising that we start to see benefit from that and we start to gain some yield assumptions some yield gains as a result, and then I think the other kind of basic assumption that we've made which I think we talked about last quarter is that operating.

Stephen C. Walker: So, from an EBITDA basis, that's the basic assumption. But I think the most important two assumptions were the first two, Yahoo ramping by mid-year, and we start to see some yield gains as we move into the back half.

Stephen C. Walker: The expenses will kind of be running at roughly Q4 levels for the year. So from an EBITDA basis, that's the basic assumption.

Stephen C. Walker: But I think the most important two assumptions were the first to Yahoo ramping by mid year, and we start to see some yield gains gains as we move into the back half.

Stephen C. Walker: In terms of the dev work required to make Apple successful, yeah, I don't think there's anything. It's a publisher partner of ours, so there's nothing that is dramatically special, unique, or different about it. I think all the work that we're doing on making performance advertisers successful and performance advertising works applies to Apple just like it applies to any of our other publishers. So I don't think there's anything particularly unique. Obviously, they're a big partner. They have their own requirements, but that's true of any of our publishers. So there is nothing really unique there.

Stephen C. Walker: In terms of Dev work required to make Apple successful.

Stephen C. Walker: Yes, I don't think Theres anything it's a it's a publisher partner of ours. So theres nothing that is dramatically special or unique or different about it I think all the work that we're doing on making performance advertisers successful in performance advertising work that applies to Apple just like it applies to any of our other publisher.

Stephen C. Walker: So I don't think Theres anything, particularly unique obviously there are big partner they have their own requirements, but that's true of any of our publishers. So so nothing really unique there.

Zach Cummins: Great, thanks for taking my questions. Thanks, Zach.

Stephen C. Walker: Yeah.

Speaker Change: Great. Thanks for taking my questions.

Speaker Change: Thanks Zack.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of James Kopelman of T.D. Cohen. Your line is now open.

Zach Cummins: Okay.

Speaker Change: Thank you.

James McGee Kopelman: We standby for our next question.

Operator: Yeah.

Operator: Yes.

Operator: Our next question comes from the line of James Kopelman of TD Cowen. Your line is now open.

James McGee Kopelman: Good morning, and thanks for taking the questions. The first one's for Adam.

James McGee Kopelman: Good morning, and thanks for taking the question first one for Adam You mentioned financial Advertiser doubled their campaign budget more than doubled what was the role.

Adam Singolda: You mentioned that the financial advertiser doubled their campaign budget or more than doubled it. What was the role of AI specifically in the success that they experienced? And how will that potentially reach larger benefits as more advertisers take advantage of your AI and Jen AI tools? And then I also wanted to ask about retention rates, which you mentioned benefit from training your AI models. The question is, how much of your R&D budget are you allocating toward training AI models over time? And then I have a follow-up question.

Adam Singolda: AI, specifically and the success that <unk> experienced and how will that potentially reach reap larger benefits as more advertisers take advantage of your AI.

Adam Singolda: And Ginny <unk> chosen and then I'll.

Adam Singolda: So also wanted to ask about retention rates, which you mentioned benefit from trading your AI models.

Adam Singolda: Question is how much of your R&D budget are you allocating toward training AI models over time, and then I have a follow up for Steve.

Adam Singolda: Sure, good morning, and good questions. So on the first question, max conversion and AI play, you know, an incredibly important part of advertiser success. In this case, what you're seeing is a fantastic brand name that we all know that's migrating to use Taboola's core technology, Taboola ads with max conversion. And what they're seeing, and but their objective was, you know, very lower funnel specific metrics they were looking to get.

Speaker Change: Sure Good morning, and good questions. So on the first question next conversion NII play an incredibly important part of advertisers' success on <unk>.

Adam Singolda: This case, what Youre, saying is.

Adam Singolda: Is a fantastic brand name.

Adam Singolda: That we all know that's migrating to use to <unk> core technology tubular ads with Max conversion and what Theyre seeing and but the objective was in a very lower funnel specific metrics that we're looking to get and once starting to work with us. They had an initial spend goal which was significant by the way.

Adam Singolda: And when they started to work with us, they had an initial spend goal, which was significant, by the way. The results were so great that they decided to double the spend. Now, I don't know if that, you know, doubling came from someplace else, but I was happy to see it.

Adam Singolda: <unk>.

Adam Singolda: The results were so great that they decided to double the spend and I don't know if that Dublin care from someplace else, but I was happy to see it.

Adam Singolda: But I can tell you, it was all driven by AI, specifically showing that the cost per acquisition is well within the range of what they were expecting, and even better. And, you know, like I told my board yesterday. We had a board meeting. I said, all I want is just 1000 of those, right? I just want to see that again, and again, and again.

Adam Singolda: But I can tell you it was all driven by AI and specifically showing that cost per acquisition is well within the range of what they were expecting an even better.

Adam Singolda: And you know like I told my Board yesterday, we had a borrowing I said all I want to just 1000 of those right I just wanted to see that again and again and again because at the end of the day. If you think about Ebola, we now reach about 600 million people a day.

Adam Singolda: Because at the end of the day, if you think about Taboola, we now reach about 600 million people a day, DAUs, so roughly the size of Snap or so. And so we have significant reach and a lot of supply. So for me, if I can continue to make advertisers successful and get more budgets, I truly believe we can double and triple the company. And that is why this is the number one priority for the company.

Adam Singolda: So roughly the size of snap or so.

Adam Singolda: And so we have significant reach and a lot of supply. So for me if I can continue to make advertisers successful and get more budget I truly believe we can double and triple the company and that is why this is the number one priority for the company and that is why we invest so much from the product and tech team on making performance advertisers et cetera, and then ideally top tier.

Adam Singolda: And that is why we invest so much of the product and tech team in making performance advertisers successful, and, ideally, top-tier performance advertisers successful. In terms of allocation, nearly half of our R&D works on a variety of different things relating to performance advertising. And I can tell you that the team presents to the board every board meeting. It's top of mind for our management team, our board, us as a company. In terms of financials, I'm not sure if we can share specifically how much in dollars, but about half of our tech team is working on that.

Adam Singolda: <unk> advertiser successful in terms of Colocation nearly half of our R&D works on a variety of different things relating to performance advertising.

Adam Singolda: And I can tell you we know that team presented to the board every board it's top of mind for our management team our board as a company in terms of financials I'm not sure. If we if we show specifically how much dollar wise, but it's about half of our tech team is working on that.

Stephen C. Walker: And then you also asked a little bit about retention rates. So I think we disclosed in our shareholder letter this time that the NDR of our advertisers that are using our AI and our new tools there have double-digit improvements in their NDR, which is a great measurement of kind of how they're doing. We haven't disclosed any new information about advertiser retention rates, but obviously, your NDR can't be that positive if you're losing your advertisers. So it's obviously a good sign. Yeah, I think you were.

Adam Singolda: And then you also asked a little bit about retention rates.

Stephen C. Walker: So I think we disclosed in this in our shareholder letter this time that our.

Stephen C. Walker: Yes.

Stephen C. Walker: And Dr of our advertisers that are using our AI and our new like our new tools, there have double digits improvements in there and Dr. Which is a great measurement of kind of how theyre doing we haven't disclosed any new information about advertiser retention rates, but obvious.

Stephen C. Walker: Youre MTR can't be that positive if youre, losing your advertisers. So it's obviously a good sign I think you were asking so what we do now and again with the necessary financial cost of that but what we're doing it we're essentially and Thats a big transition in 2024, we're spending a lot more resources on training, our AI too from a cold start perspective to look at historic data.

Adam Singolda: Yeah, I think you were asking, so what we do now, and again, we didn't show the financial cost of that, but what we're doing, we're essentially, and that's a big transition in 2024, we're spending a lot more resources on training our AI to, from a cold-start perspective, look at historic data so that we can create lists of recommendations that take advantage in a greater way from advertisers that are So if you're starting a campaign with Taboola today, if you remember, I said earlier that one of the biggest opportunities and challenges around advertiser retention is showing them success really, really fast.

Adam Singolda: So that we can create list of recommendations that are taken advantage in a greater way from advertisers that are like you. So if you are starting with a campaign with Ebola today.

Adam Singolda: If you remember I said earlier, that's one of the biggest opportunities and challenges around advertiser retention is shown in success really really fast the faster you can get them conversions the less the likelihood the churn. So what we're doing now is we're training our models in a significant new way to take advantage of historic data and.

Adam Singolda: The faster you can get them converged, the less likely they'll churn. So what we're doing now is training our models in a significantly new way to take advantage of historic data and create better lists of recommendations that can come faster to consumers so that, hopefully, we can make conversions come earlier in the process, and from that, increase retention rates. So that's what we're doing now, and I did mention that in the letter.

Adam Singolda: Create better list of recommendations that can come faster to consumers. So that hopefully we can make conversions come earlier in the process and from that in an increased retention rates. So thats what were doing now and you've mentioned that in the letter.

Stephen C. Walker: And then just one last one for Steve. On the cadence of sales and marketing expense through 2024, it is your biggest OPEX line. Can you just remind us, what are the key drivers this year for sales and marketing? And should that expense line continue to rise sequentially throughout the year, given your various investments? And do you have any other call-outs across OPEX as we go through the year?

Adam Singolda: And then.

Stephen C. Walker: Just one last one for Steve on the cadence of sales and marketing expense through 2024. It is your biggest Opex line can you just remind us what are the key drivers this year.

Stephen C. Walker: For sales and marketing and shared it should that expense line continue to rise sequentially throughout the year given your various investments and do you have any other callouts across opex as we go through the year.

Stephen C. Walker: Yeah, I think so generally we've hired most of the people that we're going to hire. Most of this hiring, by the way, in sales and marketing, is to support the transition of advertisers from Yahoo to Taboola and to support kind of that revenue jump. So we've hired most of what we're going to hire at this point. Q1 was a mostly full quarter for that.

Steve: Yes, I think so generally we've hired most of the people that we're going to hire.

Stephen C. Walker: Most of this hiring by the way in sales and marketing to support the transition of advertisers from Yahoo to Mueller and to support kind of that revenue jump.

Stephen C. Walker: So we've hired most of what we're going to hire at this point Q1 was a mostly full quarter for that so while there probably will be.

Stephen C. Walker: So while there probably will be a slight step up going forward, it's not going to be very large. So, generally speaking, I think we're at about the right level, at least now. Now let's, you know, we've got work left to do. We're going to finish that work over the next couple of months, and by mid-year, we're supposed to be fully ramped. Then we'll reevaluate. We'll just see where we're at and see if there's any need for additional resources or anything like that.

Stephen C. Walker: Slight step up going forward, it's not going to be very large so generally speaking I think we're at about the right level at least now now lets we've.

Stephen C. Walker: So we've got work left to do were going to finish that work over the next.

Stephen C. Walker: A months and by mid year, we're supposed to be fully ramp then we'll reevaluate and we'll just see where we're at and see if there is any need for additional resource or anything like that but as of now the expectation is we have what we need.

Stephen C. Walker: But as of now, the expectation is that we have what we need. And like I said, the only other call-out I would give is that, you know, we think that we're going to be roughly flat on operating expenses from here for the rest of the year. So I think, generally, we feel good about where we're at with the caveat that we'll reevaluate once we have all those advertisers on board and we understand what we need to do.

Stephen C. Walker: Like I said, the only other call out I would give is that.

Stephen C. Walker: We think that we're going to be roughly flat on operating expenses from here for the rest of the year. So I think generally we feel good about where we're at with the caveat that we'll reevaluate once we have all those advertisers onboard and we understand what we need to do.

James McGee Kopelman: Great. Thanks, guys. I appreciate all the help. Thanks, James.

Speaker Change: Great. Thanks, guys I appreciate all the help.

Speaker Change: Thanks James.

Operator: Please stand by for our next question. Our next question comes from the line of Jason Helfstein of Oppenheimer. Your line is now open.

Speaker Change: Thank you <unk>.

James McGee Kopelman: Please standby for your next question.

Jason Stuart Helfstein: Thanks for taking the question. There are two questions.

Jason Stuart Helfstein: Our next question comes from the line of Jason they'll sign of Oppenheimer. Your line is now open.

Adam Singolda: Just one, on the progress around Yahoo, you know, given you did $100 million in the quarter, and I think we had like a $450 target for the year, it would seem like you're definitely going to track above that given the seasonality. So, you know, I don't know if you want to kind of help us think about what the new number would be. 500, 550.

Jason Stuart Helfstein: Thanks for taking the question two questions.

Adam Singolda: Just one on the progress around Yahoo.

Adam Singolda: Youre, giving you did $100 million in the quarter and I think we have like a 450 target for the year. It would seem like youre definitely going to track above that given the seasonality.

Adam Singolda: Don't know if you want to kind of help us think about what the new number would be whether it's like 500 or 550, and then second word.

Jason Stuart Helfstein: And then second, you know, if we back out Yahoo, it would imply like, you know, the business is down four, although we have talked about how it's not really a fair way to look at it for a host of reasons. But were there any specific pockets of weakness, either on a product side or geographic side or ad category side that we need to be mindful of that in the quarter? No, so, hey, just in the morning. No, so, Juan, you know, we all did cross the 100.

Speaker Change: Gary I would imply light.

Speaker Change: The business was down four although we have talked about how it's not really a fair way to look at it for a host of reasons, but were there any specific pockets of weakness.

Speaker Change: Either on a product side or geographic side or ad categories.

Speaker Change: We need to be mindful for.

Adam Singolda: So one, you know, Yao did cross the $100 million mark as we expected, which is great to see. We like to see that things we say happen. I think at this point, we're looking at Yao as part of our core, similar to Apple, similar to other big partners we have, in a way that we have one source of demand, and that demand is being distributed across multiple types of publishers, some big and some small, and Yao is obviously a big publisher.

Speaker Change: In the quarter. Thanks.

Speaker Change: So I had just in the morning.

Adam Singolda: We reallocated crossed $100 million as we expected, which is great to see we like to.

Adam Singolda: Two to see that things would say happen.

Adam Singolda: I think at this point, we're looking at <unk> as part of our core similar to Apple is similar to other big Big partners. We have in a way that we have one source of demand and that demand has been distributed across multiple types of publisher some big and some small and <unk> is obviously, a big publisher so from that perspective in our core if you do that type of math is growing double digits, which is good to see.

Adam Singolda: So from that perspective, core, if you do that type of math, it's growing double digits, which is good to see. I'm even happier to see performance advertisers that are spending and migrating, and getting good results. We spoke about that earlier today. So, you know, things are moving as we'd like them to. We're on track to complete the migration by mid-year, as we planned. And again, there's a lot of work ahead of us, so we're not taking it lightly. It's obviously a big partnership, but as of now, there's nothing new to share beyond the fact that we do the work and it's going as planned.

Adam Singolda: So from that perspective, I'm happy I'm happier even to see performance advertisers that are spending and migrating and getting good results. We spoke about that earlier today. So things are things are moving is reluctant to see we are on track to complete the migration by midyear as planned.

Adam Singolda: And again, there's a lot of work ahead of us. So we're not thinking it's likely it's obviously ramping a big a big partnership but as of now there is nothing new to share beyond the fact that we do the work and it's going as planned.

Speaker Change: Okay. Thanks.

Adam Singolda: Okay.

Speaker Change: Please standby for our next question.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Justin Patterson of KeyBank. Your line is now open. Thanks for taking my questions.

Adam Singolda: Our next question comes from the line of Justin Patterson of Keybanc. Your line is now open.

Operator: Thanks for taking my question Jacob on for Justin.

Justin Tyler Patterson: With revenue from top brands Amc's gross and 20% of revenue Mark what efforts are driving the recent success youre seeing with these advertisers.

Justin Tyler Patterson: And with the introduction of <unk> select is there anything you can share in terms of early reception from these premium advertisers.

Justin Tyler Patterson: And how do you believe this expands the opportunity with this cohort of advertisers.

Justin Tyler Patterson: Yeah, thanks for the question, Jacob. So, what we can say is what's driving success for those advertisers, and why is our premium kind of brands and agencies business growing to above 20%? I think it's a combination of factors. As with anything, it's not one thing.

Justin Tyler Patterson: Yes. Thanks for thanks for the question Jacob So.

Justin Tyler Patterson: Well, we can say is what's driving success for those advertisers and why is our premium brands and agencies business growing to above 20% I think it's a combination of factors as with anything its not one thing. So Adam spoke earlier about the fact that we're seeing really good performance of Max conversions in our.

Justin Tyler Patterson: Hi technology for those advertisers. So that's definitely a big part of it. So I think the financial Advertiser that we talked about who came across and spent.

Stephen C. Walker: So Adam spoke earlier about the fact that we're seeing really good performance of our max conversions and our AI technology for those advertisers. So that's definitely a big part of it. So, you know, I think the financial advertiser that we talked about who came across and spent, you know, a lot more than they even expected to because it was working so well for them. That's a big part of it, like when the technology works, you get more budget.

Stephen C. Walker: A lot more than they even expect it too because it was working so well for them. That's a big part of it like when the technology works you get more budgets, but we've also had a sales focus on this so we have built out.

Stephen C. Walker: Capabilities and teams that are specifically targeting and building relationships with major brands and agencies and that's helping.

Stephen C. Walker: What we realized is that with the.

Stephen C. Walker: But we've also had a sales focus on this. So we have built out, you know, capabilities and teams that are specifically targeting and building relationships with major brands and agencies. And that's helping.

Stephen C. Walker: With the success, we're seeing with the technology being at the state. It is we then announced table of select because we think we're at the right time and in the right position now to package everything together into an offering for these large brands and agencies that we think works really well technology works, we've got the right inventory.

Stephen C. Walker: If you think about the quality of our publisher inventory and what's happened to it over the last year. We've added Apple we've added Yahoo. We've built our relationship with Microsoft like we have really really high quality supply that has grown dramatically. We've got technology, that's working for them and now we've got the sales K.

Stephen C. Walker: What we realized is that with the success we're seeing with the technology being at the state it is, we then announced Taboola Select because we think we're at the right time and in the right position now to package everything together into an offering for these large brands and agencies that we think works really well. Technology works, we've got the right inventory, like if you think about the quality of our publisher inventory and what it has happened to it over the last year, we've added Apple, we've added Yahoo, we've, you know, built our relationship with Microsoft, like we have a really, really high-quality supply that has grown dramatically.

Stephen C. Walker: <unk>, So we decided to put it all together into an offering called <unk> select that we think is now at the right time and place to really succeed. So that's kind of how it all came together. So the success countering technology comes from a sales focus it comes from the right having the right supply and we're now at the right time in moments of really packaged together and go sell it.

Stephen C. Walker: We've got technology that's working for them, and now we've got the sales capability. So we decided to put it all together into an offering called Taboola Select that we think is now at the right time and place to really succeed. So that's kind of how it all came together. So the success comes from technology, it comes from sales focus, it comes from having the right supply. And we're now at the right time and moment to really package it together and sell it aggressively.

Stephen C. Walker: Aggressively.

Speaker Change: Thank you.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Mark Zgutowicz of The Benchmark Company.

Speaker Change: Thank you please standby for our next question.

Mark John Zgutowicz: Our next question comes from the line of Mark the graduates of the benchmark Company. Your line is now open.

Mark John Zgutowicz: Your line is now open. Hi guys, this is Alex Donford. Mark, thanks for taking call.

Alex Donford: Hi, guys. This is Alex on for Mark Thanks for taking the question.

Alex Donford: Could you, perhaps quantify the e-commerce revenue ex Tac penetration in <unk>, and what you factored into your growth expectations throughout the year as youre, leading to these new relationships.

Alex Donford: And then how should we be thinking about the ex Tac margin accretion potential upon this mix shift to e-commerce over the near and medium term. Thank you.

Stephen C. Walker: So we don't break out our e-commerce business specifically, so I'll give you kind of some flavor of what we have said historically. So first of all, what we've said is that e-commerce is growing faster than the rest of our business. So that's great, like it's a growing part of our business. What's exciting about that, by the way, is that e-commerce demand, in particular, is extremely high quality. So it's coming from a combination of merchants like Walmart and Target and other people like that, as well as from brands selling directly themselves like Wayfair or Skechers or companies like that.

Alex Donford: So we don't break out our e-commerce business, specifically, so I'll give you some flavor of what we have said historically so first of all we've said is that E. Commerce is growing faster than the rest of our business.

Stephen C. Walker: That's great and I guess, it's a growing part of our business. What is excited about that by the way is that E. Commerce demand in particular is extremely high quality. So it's coming from a combination of merchants like Walmart and target and other people like that as well as from brands selling directly themselves like a wave.

Stephen C. Walker: Fair or.

Stephen C. Walker: Skechers or companies like that so it is.

Stephen C. Walker: So we're showing really good momentum. It's exceeding the growth rate of the rest of our business, and we expect that that's going to continue. So that's kind of what we've disclosed about e-commerce. Again, we haven't really disclosed how much of a breakout it is over time.

Stephen C. Walker: Were showing really good momentum, it's exceeding the growth rate of the rest of our business and we expect that that's going to continue so that's kind of what we've disclosed about E. Commerce again, we havent really disclosed how much of the breakout it is over time.

Stephen C. Walker: In terms of what there is an opportunity to kind of grow XTAC margins over time, especially relative to e-commerce, so first of all, what we've said is, you know, we expect to be at around 35% XTAC margin this year. That's kind of the midpoint of our guidance. We've said that we think that we have an opportunity to get that back up to 40% and beyond that over time, and part of that will be the growth of e-commerce.

Stephen C. Walker: In terms of what's the opportunity to kind of grow ex Tac margins over time, especially especially relative to e-commerce.

Stephen C. Walker: So first of all what we've said is we expect to be at around 35% ex Tac margin. This year, that's kind of the midpoint of our guidance. We've said that we think that we have an opportunity to get that back up to 40% and beyond that over time and part of that will be growth of E. Commerce E Commerce when we report.

Stephen C. Walker: E-commerce, we report on a net basis, so it's highly accretive to XTAC margins just because of that. But even beyond that, it's a really high-value demand and helps us with our margins overall. So I think we do believe we have a good opportunity to grow our XTAC margins back above 40% over time, and a part of that will be from e-commerce.

Stephen C. Walker: On a net basis, so it's highly accretive to ex Tac margins, just because of that but even beyond that it's a it's a really high value demand and helps us with our margins overall. So I think we do believe we have a good opportunity to grow our ex Tac margins back above 40% over time.

Stephen C. Walker: And in a part of that will be from ecommerce.

Stephen C. Walker: Yeah.

Speaker Change: Great. Thank you very much.

Operator: I'm seeing no further questions; I would now like to hand the call back over to Adam Singolda.

Speaker Change: Thank you.

Stephen C. Walker: I'm seeing no further questions I would now like to hand, the call back over to Adam <unk>.

Adam Singolda: Thanks for joining us, everyone, on the call today. I hope you can see we're very happy with our strong start to the year. The key things to take away from the call today are, one, Q1 showed great momentum in the business, beating the high end of our guidance, and repeating 2024, which makes this year a record year for us. Our growth rates are accelerating, which is great to see. And then our top two priorities are advertising success and ramping up Yahoo. Both are doing well.

Adam Singolda: Thanks for joining us everyone on the call today.

Adam Singolda: I Hope you can say, we're very happy with our strong start to the year. The key things that takeaway from the call. Today are one Q1 showed a great momentum in the business, beating the high end of our guidance raise Redding of 'twenty 'twenty, four which makes this year a record year for us our growth rates are accelerating which is great to see and then our top two priorities are advertising success and.

Adam Singolda: Apple News is now expanding. Last quarter, it was in Australia and Canada. Now it's in the US and the UK. And there's a lot going on, a lot of work, but we're very happy with the strong momentum we have seen so far. I hope to see everyone soon, and thanks for joining us.

Adam Singolda: <unk> Yahoo. Both are doing well Apple news is now expanding last quarter. It was in Australia, and Canada now it's in the U S and the U K and there's a lot going on a lot of work, but we're very happy with the strong momentum we have seen so far I hope to see everyone soon and thanks for joining us.

Adam Singolda: Okay.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Adam Singolda: Okay.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Operator: Okay.

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Operator: Okay.