Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Taboola.com Ltd (TBLA, Financial) reported strong financial performance in Q2 2024, with ex-TAC growing 21% year-over-year to $150 million.
- Adjusted EBITDA increased by 138% to $37 million, demonstrating significant profitability improvements.
- The company achieved a free cash flow of over $26 million, representing a 237% increase and a 70% conversion from adjusted EBITDA.
- Taboola.com Ltd (TBLA) successfully completed the migration of Yahoo's advertisers, which is expected to drive further growth in the second half of the year.
- The company is making significant strides in AI-powered advertising, with its Maximize Conversions technology now adopted by 70% of its revenue base.
Negative Points
- Taboola.com Ltd (TBLA) reported a GAAP net loss of $4.3 million for Q2 2024, although this was an improvement from the previous year.
- The company is conducting a test with Yahoo that will temporarily reduce reported gross revenue, although it will not affect ex-TAC or adjusted EBITDA.
- Despite strong growth, the company faces challenges in maintaining cost efficiencies as it scales its operations.
- There is a reliance on a few large partnerships, such as Yahoo and Apple, which could pose risks if these relationships change.
- The advertising market remains competitive, and Taboola.com Ltd (TBLA) must continue to innovate to maintain its growth trajectory.
Q & A Highlights
Q: Can you explain what you mean by focusing on premium content and how it differs from your existing premium news websites?
A: Adam Singolda, CEO: The open web inherently carries a premium element compared to user-generated content (UGC) platforms. Advertisers prefer placing ads on reputable publishers like Disney and NBC due to their editorial voice. With the addition of Yahoo, Apple, and Taboola Select, we can offer standalone ad units on these platforms, attracting bigger brands willing to pay more for exclusive placements. This strategy has already contributed to over 20% of our revenue.
Q: Can you provide insights into the progress with Apple News and the impact on your business?
A: Stephen Walker, CFO: We are now active in all four countries where Apple News and Apple Stocks operate: the US, UK, Canada, and Australia. We provide advertising for these platforms, which is a premium experience for advertisers. Although it's a gradual ramp-up, Apple is expected to become one of our significant publishers, helping us attract more premium advertisers.
Q: What is the contribution of Yahoo to your quarterly results, and are there any areas of weakness or strength in the ad market?
A: Adam Singolda, CEO: We are pleased with the Yahoo partnership, which provides unique access to data and supports our strategy of growing unique supply. Stephen Walker, CFO: We see strength in eCommerce and premium demand, with no specific areas of weakness. Geographically, China has been a strong market for us in terms of advertising spend.
Q: What is the expected growth rate for Taboola's core business and growth areas like news and e-commerce over the next 18 to 24 months?
A: Stephen Walker, CFO: We anticipate our core business to grow at a rate of 10% to 15% annually, driven by increased ad spend and higher yields. Our growth drivers, including Taboola News, e-commerce, and bidding, are expected to add to this growth, aiming for a combined growth rate of 15% to 20%.
Q: What are the next key product priorities after Max Conversions, and what can we expect from the renewed partnership with Microsoft?
A: Adam Singolda, CEO: We are focused on increasing retention rates and Net Dollar Retention (NDR) through initiatives like Max Conversions, which has seen significant adoption. We plan to introduce Abby, a generative AI tool, in Q3 to further enhance advertiser success. Stephen Walker, CFO: Our renewed partnership with Microsoft allows us to bid on new supply areas like Outlook and Microsoft 365, presenting exciting growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
