Taboola.com Ltd. Q3 FY2024 earnings call

• Q3 was a strong quarter, beating guidance midpoint for revenues, ex-TAC gross profits, and adjusted EBITDA. Reiterated 2024 guidance and raised free cash flow target to over $105 million.
• Growth opportunities include publisher adoption of AI, new distribution channels for publishers (e.g., Taboola News), and driving more revenue per user.
• Focus on Tier-1 advertisers with initiatives like Taboola Select, seeing traction with major car manufacturers, health insurance carriers, etc.
• Partnerships with Yahoo, Apple, and others for premium supply. Strong growth in China ad spend, with advertisers growing global spend by 2x vs last year.
• Taboola News expanded partnership with Xiaomi, and new partnerships with top 10 global OEMs started rolling out. E-commerce growth via social commerce access through shop your likes creator offering.

Revenues reached $433 million, a 20% year-over-year increase. Ex-TAC gross profit was $166.4 million, growing by 30% year-over-year. Adjusted EBITDA for the quarter was $47.9 million, up 110% year-over-year with a 29% adjusted EBITDA margin. Free cash flow was $42.9 million. Revenues contributed 100% to the overall performance, with ex-TAC gross profit and adjusted EBITDA driving significant growth.

• Reiterating 2024 guidance for all metrics. Raised free cash flow target to more than $105 million.
• Q4 guidance: Revenues between $460 million and $490 million, gross profit from $180 million to $196 million, ex-TAC gross profit from $205 million to $221 million, adjusted EBITDA from $83 million to $99 million, and non-GAAP net income from $37 million to $53 million.

• Forward-looking statements subject to material risks and uncertainties described in SEC filings.
• Potential impact of tariffs on China business, with Chinese business being a small percentage of overall revenue (low single-digit percentages).

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

A: Very happy with Apple partnership, sees opportunity to attract premium advertisers, and believes it's going well.

Q: Feedback from advertisers using Max Conversions and mix of advertisers?

A: Adoption rate of Max Conversion is about 70%, with 36% quarter-over-quarter growth in campaigns, seeing growth in healthcare, auto manufacturers, etc.

Q: Traffic goal and growth; impact of potential tariffs on China?

A: Taboola News has potential to grow traffic, Chinese business is low single-digit percentage of revenue, not a big impact.

Q: Abby awareness and product roadmap?

A: Abby is early, helps simplify advertiser onboarding, with long-term potential to personalize experiences.

Q: Headcount and staffing for '25; e-commerce update?

A: Investing in sales teams for direct-to-consumer and emerging enterprise advertisers, e-commerce continues to perform well with growth in Shops Your Likes.