Taboola.com Ltd. Q4 FY2023 earnings call

• People: Proud of employees' resilience during the Israel war. - Quarterly results: Q4 ex-TAC $168.5M (+6% y/y), adjusted EBITDA $50.1M (beat guidance), free cash flow $10.5M. 2023 free cash flow $52.2M (3x growth vs 2022). - 2024 outlook: Revenue ~$2B (+33%), ex-TAC ~$670M (+25%), adjusted EBITDA >$200M, free cash flow >$100M. - Business momentum: AI adoption accelerating, Yahoo partnership ramping with Q1 2024 revenue over $100M, new iconic brand partnership signed, $100M share buyback authorized. - Monetization: Yield growth via data, AI, and expanding advertiser base; initiatives like Maximize Conversions and Maximize Revenue, and e-commerce growth with Turnkey Commerce and AP partnership.

In Q4 2023, ex-TAC was $168.5 million, growing 6% year-over-year. Adjusted EBITDA was $50.1 million, a significant beat to guidance. Free cash flow in Q4 was $10.5 million. For 2023, ex-TAC gross profit was $536 million, adjusted EBITDA was $99 million, and free cash flow was $52.2 million. E-commerce represents approximately 20% of ex-TAC, Taboola News had revenue over $100 million in 2023, and Header Bidding are components of ex-TAC gross profit, collectively making up around 30% of ex-TAC gross profit.

• 2024: Revenue expected $1.89B-$1.94B (33% midpoint growth), ex-TAC gross profit $656M-$679M (+25% midpoint), adjusted EBITDA >$200M, free cash flow >$100M, non-GAAP net income $84M-$104M. - Q1 2024: Revenue $387M-$413M, gross profit $94M-$106M, ex-TAC gross profit $123M-$135M, adjusted EBITDA $10M-$17M, non-GAAP net income -$15M to -$3M.

• Industry changes such as cookie deprecation, generative AI, and market softness. - Impact of Microsoft's Epic platform changes on Q4 results, which had a single-digit millions of dollars impact in Q4 and a small impact in 2024 already included in guidance.

Q: Andrew Boone of JMP Securities asks about yield improvements and Yahoo's $1B opportunity.

A: Adam Singolda talks about Max Conversions, Max Revenue, Yahoo advertiser migration, and Stephen Walker confirms $1B+ value in Yahoo partnership.

Q: Jason Helfstein of Oppenheimer asks about Yahoo Q1 revenue and identity/cookies.

A: Adam Singolda confirms Q1 Yahoo revenue, and discusses cookie deprecation and first-party data.

Q: Laura Martin of Needham & Company asks about political impact and new brand partnerships.

A: Adam Singolda talks about political season impact and new brand partnership details.

Q: James Kopelman of TD Cowen asks about data and seasonality.

A: Adam Singolda talks about data and generative AI, Stephen Walker talks about seasonality and OpEx efficiencies.

Q: Daniel Day of B. Riley Securities asks about new brand partnership and publisher struggles.

A: Adam Singolda mentions Apple partnership, Stephen Walker talks about publisher impact.

Q: Justin Patterson of KeyBanc asks about new brand partnerships and incremental investment.

A: Adam Singolda talks about new partnerships, Stephen Walker talks about investment in capabilities.