Taboola.com Ltd. Q1 FY2024 earnings call

• Q1 results were above the high end of guidance range, with adjusted EBITDA growing more than 100% and free cash flow nearly doubling. - Key priorities are making advertisers successful and ramping Yahoo. MAX conversion adoption is almost 60% of revenue, and advertisers using it have double-digit higher MDR. - Launched Taboola Select for premium performance advertisers to reach top 15% of publishers including Yahoo!, Apple, etc. - Yahoo partnership is on track to complete migration by midyear, with Q1 exceeding $100 million in revenue on Yahoo supply. - Partnership with Apple expanded to U.S. and U.K. from Australia and Canada. - E-commerce business had double-digit growth, with integrations like Associated Press new sites and Amazon DSP.

Q1 revenues were approximately $414 million, growing 26% year-over-year. Ex-TAC gross profit was $139 million, representing a 20% year-over-year growth. Ex TAC growth was driven by double-digit growth in advertising spend from onboarding Yahoo advertisers, acceleration in the e-commerce business, and double-digit growth in premium brand and advertising demand spend. Revenue from top brands and agencies has crossed the 20% mark and is growing rapidly.

• Reiterated 2024 guidance: revenue expected to be $1.89 billion to $1.94 billion (33% growth at midpoint), ex-TAC gross profit $656 million to $679 million (25% growth at midpoint), adjusted EBITDA over $200 million, free cash flow over $100 million. - Q2 2024 guidance: revenues $410 million to $440 million, gross profit $110 million to $120 million, ex TAC gross profit $140 million to $150 million, adjusted EBITDA $20 million to $30 million, non-GAAP net income $0 to positive $10 million.

Q: Laura Martin asked about priorities with onboarding omnichannel advertisers at Yahoo! and focus on high-quality performance advertisers.

A: Adam Singolda said there's opportunity to grow portion of top-tier performance brand advertisers, launched Taboola Select for premium access to top publishers.

Q: Laura Martin asked about engagement drivers for 30 minutes a day.

A: Adam Singolda said Taboola news with vertical videos and utilities is driving engagement, growing from single digits.

Q: Mat Condon asked about Q2 guidance assumptions and dev work for Apple.

A: Stephen Walker said key assumptions are Yahoo ramping by midyear and yield gains in back half, dev work for Apple is similar to other publishers.

Q: Zach Cummins asked about Q2 guidance assumptions and dev work for Apple.

A: Stephen Walker explained assumptions about Yahoo ramping and yield gains, dev work for Apple is not unique.

Q: James Kopelman asked about role of AI in financial advertiser success and R&D on AI models.

A: Adam Singolda said AI via MAX conversion was key, R&D half of team on performance advertising.

Q: Jason Helfstein asked about Yahoo! revenue tracking and business weakness.

A: Adam Singolda said on track to complete Yahoo migration by midyear, no specific weakness noted.

Q: Jacob (for Justin) asked about efforts driving top brands' revenue and reception of Taboola Select.

A: Stephen Walker said combination of MAX conversions, sales focus, and premium inventory drove success, early reception positive.